Though not a new thesis that Bitcoin price could rise drastically – up to $500,000 in the next 13 years according to the first investor in Snapchat – based on what comes out of developing countries, an analysis of some figures and trends as they relate to Africa comes to mind.
Jeremy Liew and Blockchain Co-Founder Peter Smith hinged their outlook for an increased interest in Bitcoin on remittance, uncertainty and mobile penetration. These factors, especially remittance, have much to do with Africa, whose composition of developing countries have what will strengthen the rise and use of Bitcoin for several financial purposes in the coming years.
$4 bln a year
Remittance is gradually becoming a major boost for Bitcoin use in Africa – as well as in parts of Asia and Latin America. The advent of new services that use the digital currency for the purpose of sending money from one point to another has started eating into the roughly $4 bln per year cost that banks and other institutions make from international transfers to Africa.
As earlier reported, many countries in this region – and in Asia – have the most expensive transfer rates in the world as well as bureaucratic processes that make sending and receiving money to and from loved ones a little difficult. This is a major reason why the promotion of the ease of use that Bitcoin brings is essential.
19 percent remittance charge
Bitwala, for example, notes that transferring money to South East Asia is cheaper than it is to Africa where banks and intermediaries charge high fees and manipulate currency rates to their advantage. The majority of banks charge between 10-19 percent on any transfers to, from and within African countries.
The payment service provider points to a leaked document from Santander, a major Spanish banking group, as confirming the dangers of using banks.
“In 2016, the bank made €585 mln solely from international money transfers, making up 10 percent of all of its revenue, it says. In addition to transfer fees, the bank also made another killing by controlling its foreign currency exchange which helped it earn €290 mln.”
Perhaps the most shocking part is that 80 percent of all global money transfers are still conducted via banks and conventional monetary transfer channels.
Bitwala adds that the number of signups from developing countries on its platform is almost as those in the US and the EU in total – developing countries forming approximately 30 percent of its new signups globally. Bitwala recently launched into Africa to compete for market share with other companies like BitPesa, BITSSA and Luno.
Africa boasts some of the top developing markets in the world presently. This is the main reason why the continent’s market of over a billion people stands a chance to be at the center of a share struggle in a couple of years.
Africa has the youngest population in the world – about a quarter of a billion people aged 15 to 29 in Africa as of 2010. Current trend indicates that this figure will double by 2045, according to the 2012 African Economic Outlook report prepared by experts from the African Development Bank (AfDB), the UN Development Programme (UNDP), the UN Economic Commission for Africa (ECA) and the industrialized countries’ Organization for Economic Cooperation and Development (OECD), among others.
Fast forward to 2017, the October 2016 IMF’s World Economic Outlook shows that 12 of the top 25 world’s fastest-growing economies are in Africa.
These countries, according to the outlook, will continue their growth into 2019 where the latest forecast stops. The growing Internet connection rate, particularly in Africa, will also add to the increasing interest in Bitcoin.
Most of the emerging figures from Africa apply in the LATAM region where a series of events are now being put together to widen the understanding of the burgeoning economy and how to enhance access to income easily, cutting down costs and not necessarily relying on the use of a physical structure.
“A key barrier to the projected rise, however, is not its untapped market potentials or for the infrastructures. Rather, it is the lack of awareness.”