Africa: scarcity of USD is favoring Bitcoin?

By Pot Project | Pot News | 9 Jun 2020

In Africa, the scarcity of the USD favors Bitcoin. Is this happening in Nigeria in particular and in other countries of the continent: is a new economic system being sought?

What happens to the USD dollar in Africa, the currency most used to trade every day at the time of the new coronavirus?

A simple thing happens, the US dollar has become scarce despite the introduction of new and massive amounts of dollar into the system by the Fed.

In March, the Fed had to activate as many as 16 foreign exchange swap lines with as many central banks to ensure that there was greater and more constant circulation of the dollar in these countries. The USD remains, in fact, the reference currency internationally and in many countries where economic conditions have drastically devalued the national currency, the US dollar has almost completely replaced the national ones.

Hence there is an enormous scarcity, which Coindesk has called the "real USD crisis". The dollar "saves national crises" alone is no longer enough to meet the needs of nations in difficulty, and this is where cryptocurrencies like bitcoin come into play.

Bitcoin in Africa growing exponentially


If we take sub-Saharan Africa as a reference, and therefore Nigeria, South Africa, Kenya, and so on, we can see an increase in the volumes of use of exceptional bitcoin.

Towards the end of March 2020, the purchase and sale volumes of bitcoin on LocalBitcoin and Paxful combined, reached 14 million dollars, compared to an average of the previous years around 6-7 million dollars in value (data source Useful Tulips)

Numbers that from our perspective might seem insignificant, but the data should not be read from the perspective of western thought and life: the standard of living in Africa is certainly not ours.

Nigeria leads the market

Nigeria is leading the market, where the oil crisis of the past few months and the difficulty of finding the US dollar on the forex market have created a critical condition that has pushed a part of the population towards bitcoin.

It is not mass adoption, it is mainly a "cursed" need to continue doing business with a currency that has value and that can be used internationally.

After all, however, it is precisely through the need to find new solutions that new paths are discovered which are then followed by many people.

Microtasking helps to survive

Also take into account another aspect allowed by cryptocurrencies, the microtasking of small businesses based on a few clicks to be done online which at the end give the right to micro-rewards.

The micro-rewards are in bitcoin and in the order of some satoshi. In a context like the western one, such activities at the end of the month would not allow to have in the wallet quantities of bitcoins acceptable for living. But in Africa and in developing nations, where everything is missing and living costs very little, even 200 thousand satoshi (0.002 BTC = about 17 euros) per month can make the difference between life and death.

Here an activity as insignificant as microtasking favors the use and therefore the diffusion of cryptocurrencies and proposes their way of redemption to nations that try to emerge, or already just to live in a world of exploitation.

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