Bitcoin brings inclusion to Africa’s under-banked

Continent’s consumers are enjoying many other benefits besides speculation

ALTHOUGH much of the news coverage about bitcoin has been about speculative investors buying crypto, holding it and selling it for profit, Africa’s consumers have found many other opportunities to benefit from the bitcoin economy.

This was according to Ray Youssef, co-founder and chief executive of leading peer-to-peer bitcoin marketplace Paxful, speaking at an event in Cape Town.

Paxful has more than 2 million users globally with South Africa one of the top markets for the marketplace internationally.

Paxful’s mission is to give people a simple, fair and secure platform for buying and selling bitcoin and aim to bring financial inclusion to the under-banked and unbanked through peer-to-peer finance, where every user gets a free digital wallet that lets them send, receive and store bitcoin.

Paxful is on a mission in Africa to increase access to the bitcoin economy for many youth on the continent by launching educational workshops across Africa starting in South Africa and Kenya and other countries including Nigeria and Ghana later in the year.

According to Paxful, the bitcoin economy last year reached a market capitalisation of $138.6 billion (R1.9 trillion) and despite a fluctuating market, Paxful saw an upswing activity driven by African consumers.

The continent conducted 6.5 million trades last year, an average of 17 000 trades a day.

Paxful, founded in the US, since its launch has been operating in South Africa, Nigeria, Ghana and Kenya, among Africa’s other fastest-growing markets.

Youssef said that although much of the news coverage about bitcoin has been about speculative investors, Africa’s consumers have found many other opportunities to benefit from the bitcoin, leading Paxful to believe that Africa will spearhead the peer-to-peer economy in the future.

Besides the speculative, the journey also includes grey markets.

“The first transaction on the internet was a $20 (about R280) marijuana purchase; no shame in that, but that’s how technology started.

“By grey markets I mean adult sites, gambling sites, etc,” he said.

Youssef added that things are getting greyer and greyer. In America, selling vaporisers online and other tobacco products online was not legal in every state, so traders had to sell them through bitcoin.

“The question now is, where are we? We are in the speculative phase of bitcoin, speculation accounts for 90 to 95 percent.”

Youssef added that he and his co-founder, Artur Schaback, got into cryptocurrency to help the average person.

“We wanted to give them a tool for social change and social justice that can make a day-to-day difference in the lives of working class people all over the world – not because it can be another asset class for rich kids to play with; they already have enough of those things.

“At the end of the day, the little guy gets trapped. Speculation is always toxic,” he said.

Youssef said there was a huge burst in the price of bitcoin in 2017 when it was trading at about $19 000 before it crashed down to $3 000, currently it is trading at about $8 000, he said.

“I have to say, as bad as that crash was, it could have been a lot worse,” he said.

Youssef said Paxful to increase access to the bitcoin economy, it has launched series of educational workshops on the continent this year.

“As a values-driven company, we want to make the bitcoin economy accessible for everyone, especially the youth.

“We want to reach as many young people as possible to help them understand the digital currency market and transact safely and with confidence.

“Our aim is to continue to partner with customers and other key stakeholders to ensure they are well informed about the opportunities presented by peer-to-peer finance,” said Youssef.

The company also aims to build 100 schools across Africa and expand scholarship programmes.