Bitcoin Guide Africa
How to buy, send or sell bitcoins in Africa: here you get your answers!
The African Bitcoin Market and its Players
Our Bitcoin Guide Africa aims to illustrate the bitcoin setting in Africa, to describe the bitcoin market and the bitcoin affiliated companies as well as to describe how to realize a cheap cross border payment with the help of cryptocurrencies.
Bitcoin (BTC) is undoubtedly becoming a mainstream currency as seen in its recent increase in value in 2017. It began the year with $1000 baseline which grew in value to $5000 in September and proceeded to break the ceiling with a $17,500 trade-off in December.
As Africa wakes to this reality, BTC users across the continent are steadily increasing in numbers (e.g. Bitcoin to Rand / BTC to ZAR). They are also leveraging the benefits of blockchain technology in the effective running of their businesses.
However, who exactly are these frontiers and why / if Bitcoin (BTC) among all other cryptocurrencies?
One important note right at the beginning: for the Bitcoin Guide Africa we often use the term bitcoin. The main reason for this is because bitcoin is the mostly known and most spread cryptocurrency in Africa. For sure there are also other cryptocurrencies available, such as Ether, Ripple or Litecoin. Just keep in mind that in general we mean cryptocurrencies by using the term bitcoin.
Aims of this bitcoin guide Africa
I don't know how much experience you have about all these kind of cryptocurrencies and Bitcoin especially, but me, personally, I had no clue about it before I startet informing myself.
That's why the main goal of this bitcoin guide Africa is to give you an overview about Bitcoin, Ether and the cryptocurrency market in Africa. And to illustrate you the benefits of it for your daily life:
- How can I get Bitcoins?
- How can I convert Bitcoins? USD to BTC / BTC to ZAR / BTC to NAR, etc
- How can I use Bitcoins for remittances?
- How can I use Bitcoins for cross border payments?
The Genesis of Bitcoin (BTC)
For deep insights on BTC and a better understanding as to why it’s the most sorted cryptocurrency in Africa and at large, it’s best to start with the genesis of online transactions, sighting how it has evolved to include the use of cryptocurrencies such as Bitcoin (BTC).
Fiat money has always been the primary medium of exchange for goods and services. However, with the advancement in technology, new and better ways of making financial transactions are arising. Cryptocurrency is one that has taken the world by storm.
Simply put, fiat money is a form of payment whose value is determined solely by the governing state or by parties included in the transaction. Its value, however, is neither fixed nor is it necessarily backed by a commodity.
As a legal tender, if outlawed by the government, the currency loses its value unlike precious metals such as gold which have a lifetime’s worth. A good example would be the British Pound, US Dollar, the Japanese Yen, and South Africa’s Rand.
In the case of high inflation, the value of fiat money may increase or decrease depending on the stock market. If a recession occurs, we may see the end of certain government-sponsored currencies – a familiar scene in today’s Zimbabwe economy.
Fiat currency thus suffers significant setbacks in its use and is vulnerable to manipulation by both the government and interested parties such as banks. This makes it quite unsafe for high-risk investments.
Cryptocurrency tries to address all the pitfalls associated with fiat money in its three main agenda. To safeguard financial transactions through the use of strong cryptography, govern the creation of additional crypto-units, and validate the transfer of assets.
- Safeguard financial transactions through the use of strong cryptography,
- Govern the creation of additional crypto-units, and
- Validate the transfer of assets.
In other words, cryptocurrencies are a digital form of money that is boundless to any jurisdiction laws but traversing borderlines with instantaneous transactions safeguarded by high cryptography.
Cryptocurrencies act as a complementary currency to the nationally accepted money. As a virtual currency, they are not controlled by a single entity making them digitally decentralized.
Examples of cryptocurrencies are:
- Bitcoin Cash,
- and others.
Bitcoin (=BTC) is the first decentralized cryptocurrency ever to be created. It came into existence shortly after 2008, a year that saw Occupy Wall Street accuse significant banks of misusing borrowers' funds and duping the system. BTC was meant to eliminate such hurdles by keeping the seller in charge of the transactions.
In 2009, an open source software was released by an anonymous group aliased Satoshi Nakamoto. The software pioneers wanted to remove the concept of middlemen, cut out transaction interest fees while making the system transparent from malicious parties.
BTC, a peer to peer electronic cash system, was born. Just like most cryptocurrencies, it works under the blockchain technology to ensure all its intended purposes are met.
Bitcoin (BTC) in-depth
Simply put, Bitcoin (BTC) is a new form of money and a payment network. By a new form of money, we are referring to the BTC token where you have a code an extract that represents digital ownership of a concept something like a virtual IOU.
The payment network refers to the BTC protocol, a decentralized network in charge of maintaining a ledger of the balances of BTC token. When putting together, you get the Bitcoin (BTC) cryptocurrency.
The Bitcoin (BTC) money is digitally created and stored online in what we call a BTC wallet. It’s not only rare to find but expensive to buy hence the name digital gold. BTC doesn’t exist in paper copies but is only transacted digitally.
The Bitcoin (BTC) system allows users to transact freely without third-party interference from governments or payment gateways.
How Bitcoin (BTC) works
Bitcoin (BTC) works under two concepts: the blockchain technology and cryptography. Blockchain technology is in charge of the decentralized nature of the currency while cryptography works on its secureness.
The blockchain technology is a value exchange/transfer protocol that allows a public ledger to be distributed on a decentralized network such as the internet. The ledger or database contains information on every complete transaction ever made.
Read more about blockchain technology
The recorded information cannot be copied or altered retroactively without the consensus of other Bitcoin (BTC) miners and alteration of subsequent blocks. This means for a transaction to be verified it goes through strict scrutiny before being added to the ledger and it can only have one owner.
Blockchain technology is characterized by having an independent database that relies heavily on a peer-to-peer network (P2P) and a distributed timestamp server.
The technology has broad applications other than carrying out cryptocurrencies transactions. IBM for instants is spending millions on the study of its capabilities to power up different projects.
According to the original paper written by Satoshi Nakamoto (BTC: A Peer to Peer Electronic Cash System), the word blockchain existed as two different entities and here’s why.
A block referred to a record of a new transaction while the chain was the collection of successive blocks. Whenever a block is verified, it is added to the pre-existing chain.
The Bitcoin (BTC) blockchain file has increased in size over the years. In August 2014, the blockchain size was recorded to be 20GB and has significantly grown to 100GB by January 2017.
Cryptography plays a key role in the Bitcoin (BTC) protocol. It protects the identity of BTC users, ensures all transactions are conducted in a trustworthy manner while securing the transactions information.
Read more about cryptography
It does these using two functions: the hash function and digital signatures. The hash function transforms massive amounts of data into short forms that are difficult to replicate.
In Bitcoin (BTC), it's mainly concerned with the integrity and protection of data flow in the blockchain. The hash function does this by creating a hash sequence on the ledger to preserve the chronological order of transaction.
The hashing method is used in four procedures:
- During verification and validating of account balances in wallets
- During block mining
- To cipher wallet address
- To cipher transactions between BTC wallets
In cryptocurrency, digital signatures are functions that identify a specific Bitcoin (BTC) wallet. They act as proof that a particular wallet is what it states to be – the actual bitcoin value.
By assigning a digital signature to a transaction, disputes are minimized as to whether or not the ID wallet is indeed the owner of the transaction. Digital signatures also remove the chances of a wallet being impersonated.
So how does it work?
Simple, digital signatures use the wallet’s private key to encrypt transactions and use the wallet's public key to decrypt the transaction. Your public key, for instance, is like your bank account number, while the private key is likened to your bank account pin.
Get cryptocurrency knowledge
Cryptocurrencies such as Bitcoin or Ethereum are a completely new area of knowledge for many people. That's a main reason why online courses about blockchain, distributed ledger technologies and cryptocurrencies are booming.
Online course market places like Udemy or Coursera offer bitcoin and cryptocurrency courses. Udemy courses are more intended to acquire some skills without formal degree. Coursera online courses are offered by leading universities as MOOC and acknowledged certificates are available.
Suggested bitcoin online courses:
Blockchain and Bitcoin Fundamentals (on Udemy) - Learn the key elements of blockchain and Bitcoin in this bestselling video course and accompanying PDF glossary.
Bitcoin and Cryptocurrency Technologies (on Coursera) - How does Bitcoin work? What makes Bitcoin different? How secure are your Bitcoins? How anonymous are Bitcoin users? What determines the price of Bitcoins? Can cryptocurrencies be regulated? What might the future hold?
Bitcoin in Africa
The uptake of Bitcoin (BTC) for the longest time has largely tilted towards the developed economies, but things are slowly beginning to take a turn. African nations are becoming more vigilant to the use of BTC as an alternative to their crippled fiat currencies.
Many see it as an instrument for bringing real economic growth, financial democracy, and autonomy in how businesses operate. Spearheading the movement are Nigeria and Ghana to the west, Kenya and Uganda to the east, Zimbabwe and South Africa to the South and Egypt to the North.
Read my article about South Africa: Bitcoin market guide South Africa
Though skeptics throughout the continent view this cryptocurrency as a floating bubble, a particular demography seem to embrace Bitcoin (BTC). African millennials are aggressive Bitcoin investors and contribute to almost half of the Bitcoin population.
The African Bitcoin beneficiaries use the digital coin and its technology in three ways:
- as an investment opportunity,
- remittance currency, and
- technology leverage.
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Bitcoin investment in Africa
The bitcoin investment in Africa can be separated into Bitcoin trading and Bitcoin mining:
Bitcoin trading in Africa
A clear indication of the growing Bitcoin community in Africa is the rise in exchanges offering Bitcoin rate and other cryptocurrencies trading. BTC exchanges are digital marketplaces where buying and selling of BTC using Fiat or alternative currencies occur.
Read more about Bitcoin trading in Africa
Some of the local exchange companies in play are the iconic NairaEx, Luno (SA's leading convert Bitcoin to rand / BTC to ZAR trade-off), CoinDirect, BitPesa (Kenya's leading bitcoin rate converter), and Golix.
African Bitcoin traders also use international exchanges. They include Bittrex, Cryptopia, Bleutrade, Nova exchange and Poloniex just but to mention a few.
As a fluid commodity, the Bitcoin price is significantly determined by demand and supply. If the demand is high, the cost of a single BTC unit (Satoshi) will go up, but if the demand is low, its value depreciates.
An excellent example of an African country that is heavily investing in Bitcoin trade is South Africa. According to Google Trends, SA attracts the highest numbers of Google queries in relation to Bitcoin.
Even with the downturn in fortunes earlier on this year, the South African locals’ enthusiasm is yet to be dampened. Many are still interested in the convert of Bitcoin to rand and vice versa.
Much of the cryptocurrency commerce lies on the crypto to fiat trading such as convert of Bitcoin to rand as seen in South Africa. Here residents are purchasing different kinds of crypto coins with stress on Bitcoin (BTC). It might take a couple of years before Africa experiences much of crypto to crypto trading as it is in the west.
Bitcoin trading in Africa is however still handicapped in some regions due to the poor internet connection and lack of smartphones accessibility. Most places are still underserved by the telecommunication companies; however, this is slowly changing for the better.
Bitcoin mining in Africa:
In the Bitcoin ecosystem, miners act as the sellers of the digital coin.
Moreover, with a lucrative Bitcoin to dollar rate (BTC to USD), they tend to have a say in how trading goes hence the increased focus in the number of today’s miners.
Read more about Bitcoin mining in Africa
After successfully verifying and processing transactions, miners are rewarded with new Bitcoins. To do so, miners rely on high computing power to solve complex algorithms. This makes free bitcoin mining quite a costly venture with high-profit returns.
In Africa today, the number of Bitcoin miners is not as high as compared to developed countries that have a stable infrastructure. However, the small number of miners available is making a significant impact both locally and internationally.
A successful story would be that of Kenya's Eugene Mutai, who started free bitcoin mining with zero coding skills and with only a high school diploma. His momentum slowly picked and has now turned him into one of the country’s most fortuned bitcoin miners.
Many African companies are looking into free Bitcoin mining as well as it is a lucrative spot to earn bitcoin. Recently, Ghana’s IT-based firm GDC (Ghana Dot Com) launched a bitcoin mining facility bid to the first of its kind in the continent.
Regarding workforce, Cairo seems to be the mecca for Bitcoin miners. According to BTC Africa, Egyptians rely on a secret source of power (the sun) that keeps them a step ahead from the rest of the competition in the continent.
However, most of these Bitcoin generators mask their profile in fear of being identified and ransomed by black market foreign exchanges.
Bitcoin as remittance currency in Africa
Bitcoin offers a cheaper way of peer-to-peer transacting. Though it is proven to be fluid in the past, its lack of government interference and transparency makes it an attractive medium of exchange in the African scene.
Many Africans prefer to buy Bitcoin because the transaction fee is low for remittances based on bitcoin values for cross-border transfers.
A good example would be Zimbabwe, a country that is facing Forex and currency challenges. The cost of sending money through banking systems is slow and tedious not forgetting the high transaction rates issued.
Before, giant money transfer operators like Western Union, PayPal, and MoneyGram primarily dominated Africa’s international remittance market. However, with the introduction of Bitcoin generator remittance startups in Africa, the ground seems to level-up.
Disrupting the current trend is Abra; a major app that enables P2P (peer to peer) money transfer, Kenya’s very own BitPesa; BitSpark, a universal end-to-end money transfer app, Remitano, Geopay and Coindirect, situated in South Africa, disrupting the P2P market.
Even as bitcoin transaction across Africa continues to grow there lies a dilemma in the lack of enough ecosystems that support Bitcoin as a mode of payment. Many merchants don’t recognize Bitcoin forcing its users to convert into local currencies to trade.
Also, the existence of fintech companies the like of Safaricom’s M-Pesa gives Bitcoin an intense competition. As the largest telecommunication company in Kenya, it owns over 70% of share in the Kenyan market. This makes Kenya a difficult country to penetrate in terms of cryptocurrency transactions.
Use of Bitcoin protocol in Africa (Technology leverage)
The blockchain technology is also another aspect that is transforming the face of Africa. African developers and entrepreneurs are leveraging Bitcoin technology in tackling some of the continent's severe problems of unbanked masses, untrusted voting systems and much more.
With more support coming from governments such as the Kenyan government that established a task force to study the impacts of blockchain technology, Africa can leapfrog the digital divide and become a market frontier just as it did with the mobile phone ecosystem.
Africa Bitcoin Top Players
Some African nations show a prospering Bitcoin economy based on their trading volumes. They include South Africa, Nigeria, Kenya, and Ghana. The number of Bitcoin generator startups and community activities surrounding Bitcoin talks in these countries is quite high.
Zimbabwe and Botswana are also showing an increase in Bitcoin communities.
To mention a few, here are some of the leading Bitcoin Startups in Africa:
- Bitland: Uses the Bitshare blockchain to allow individuals and corporations to survey title deeds and land records.
- PmCedis Capital: This is a company that offers medium Bitcoin wallet top-ups and withdrawals (one of Ghana's leading companies in charge of BTC transaction)
- Dream BTC Foundation: it’s an organization interested the wide acceptance of Cryptocurrencies across Africa especially in how they can earn Bitcoin.
- BTCGhana: this is a remittance company for the Ghanaian scene
- Bithub: advisory firm that aims to benefit fintech startups and blockchain innovations interested on how to earn BTC through free BTC mining.
- BitPesa: B2B money transfer app for the African cryptocurrency audience
- Bitsoko: Android-based e-wallet that runs on blockchain technology
- Chamapesa: a startup that's creating a blockchain booking service for self-help groups.
- Pesamill: one of Africa's leading cryptocurrency exchanges
- Bankymoon: a startup that focuses on blockchain solutions for companies. Famed for their 2015 world’s first blockchain metering system.
- Blockchain Academy: a cryptocurrency institution that educates people on the use of blockchain and cryptocurrencies.
- Luno: Africa’s largest crypto-exchange and e-wallet concern with the change of Bitcoin into Rand (BTC to ZAR converter) [read here the extensive description and how-to-guide about Luno]
- Custos Media Technology: This is a tech Company that is fighting media piracy.
- The sun Exchange: It's a solar energy marketplace where people bitcoin investment is used for energy saving purposes.
- PayFast: It’s an online payment solution for web transactions that allows you to buy Bitcoin and sell Bitcoin to a dollar.
- Tari Labs University: easy-accessible learning material for blockchain, digital currency anddigital assets
- Remitano: Peer to peer bitcoin exchange
- Coindirect: Peer-to-peer marketplace, wallet, exchange and comprehensive API
- SureRemit: It's a remittance company concerned with subsidizing the bitcoin to dollar rate.
- Naira Exchange: one of the country’s oldest cryptocurrencies exchange
- Cryptogene: a foundation focused on increasing blockchain technology awareness in Africa
- Kobocoin: digital currency and payment system similar to Bitcoin, with an African heritage.
- Satoshi Center: It’s a local hub for blockchain technology innovations in Botswana
- Bitmari: It is a Bitcoin wallet app which is essential to a bitcoin miner
- Golix: Serves as cryptocurrency exchange or bitcoin converter
Global companies with African Bitcoin services
- Paxful: Peer-to-Peer exchange and wallet, available in all African countries, offers more than 300 ways to pay for bitcoins, e.g. with your Worldremit account [read here the extensive description and how-to-guide about Paxful]
- LocalBitcoins: Peer-to-peer exchange, available in all African countries [read here the extensive description and how-to-guide about LocalBitcoins]
- Coinmama: Peer-to-peer exchange, available in nearly all African countries
- Abra: app in the world that allows to buy, store, and invest in many cryptocurrencies all-in-one place securely
- Bitspark: provides Spark, a secure web and mobile platform for money transfer operators to send and receive payments
- Bitwala: buy and sell cryptocurrencies directly from your bank acount
- Etoro: world's leading social trading platform
What’s influencing Bitcoin popularity in Africa?
Apart from the mentioned Bitcoin transaction benefits, the growth of mobile technology across Africa has also been the leading facilitator of the quick absorption of Bitcoin use in the continent.
As a digital medium of exchange, Bitcoin offers African mobile users a genuine way of transacting their businesses hence the rise in popularity.
Despite low per capita use as compared to the developed world, the use of mobile phones is expanding rapidly across Africa than anywhere else in the world.
In most parts of Africa, a mobile phone remains the only means of internet access.
Cryptocurrency regulations in Africa
African governments are taking a ‘let’s watch’ approach in regulating Bitcoin transactions and any other cryptocurrency. They are doing so as these are still murky waters yet to be explored deeply. However, in the past, their decisions have seemed to flip flop around.
For instance, Kenya has established a special task force to look into its potential and investment benefits.
Nigeria on the other hand, other dabbed the second largest economy in the continent, its government has yo-yoed from warning local banks from transacting using Bitcoin to suggestive policy implementations of its use.
In a new report issued by Ecobank out of the 39 countries surveyed only Zimbabwe and South Africa showed to have a conducive environment for cryptocurrency adoption.
Namibia, however, was the only exception that outright banned any use of cryptocurrency. Everywhere else the governing bodies are caught in a cryptocurrency limbo.
The main issues of concern for such governments are the lack of proper education into the technology and the lurking significant security gaps.
The State of Cryptocurrencies in Africa
While the governments slowly digest the reality of Bitcoin and other crypto-coins, Africans across the nations are warming up to the idea of Bitcoin.
The Bitcoin trade has in particularly boomed in Zimbabwe mainly due to its failed financial systems. More individuals are considering Bitcoin as storage of value. This has caused Zimbabwe to have the highest Bitcoin price once globally.
Cryptocurrencies have also become popular among Nigerians. Last year Nigeria’s Peer to peer trading almost increased by 1500 percent.
Without lucid cryptocurrencies regulations in place, Bitcoin players in the African scene are forced to draw inspiration elsewhere. Nonetheless, they remain hopeful that the governments will regulate the digital coins more so synonymously.
Benefits of Bitcoin in Africa’s economy
Bitcoin both as currency and as technology has catapulted African businesses in how they offer their services and transact. Here are some of the significant benefits seen:
- New investment option
- A possible way to make earnings
- Quick, cheaper and safer solution to remittance
- Platform for innovative ideas
- An alternative to the failed fiat currencies and government controls
The future of African Bitcoin market
The future of Africa’s Bitcoin majorly lies on the policies being implemented and those to come.
The biggest worry or what appears to have slowed down policy approvals is the independent nature, ubiquity, and secretiveness in crypto-transactions. Governments feel threatened to exploitation from untraceable digital cash for illegal trade.
However, this won’t stop the revolution of the use Bitcoin underlying technology across the continent especially among millennials.
In regards to innovation, be sure to be on the lookout for more innovative blockchain technologies incorporated the everyday running of your life.