Money makes the world go round, they say, but what if notes and coins were replaced with online code?
Bitcoin — the world’s much talked about cryptocurrency — is just that. It can’t be printed, it can’t be directly controlled by governments or central banks, but it can be sent around the world instantly at a low cost.
And in sub-Saharan Africa, where 75% of the population don’t have a bank account, experts say the currency could help millions of people pay bills and get to grips with their finances.
Transferring cash via a bank or a Money Transfer Operator (MTOs) like Western Union or MoneyGram can be costly. According to the Overseas Development Institute, the average charge to transfer $200 to Africa using traditional money transfer services is 12%. If you send $200, you pay $24. The ODI added up all the transfers that happen in a year, and found remittance fees cost the African continent $1.8 billion a year.
Bitcoin is going to make a huge difference when it starts to get accepted by merchants
Beam CEO, Nikunj Handa
What if that money could be spent on things, rather than fees?
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Erratic price value
Another major issue with Bitcoin is its volatility. In January 2013, one Bitcoin was worth around $13, surging in December to a high of $1,147. But since then, its value has dropped again and at the time of writing one Bitcoin was worth $221, according to coindesk.
“If I buy Bitcoin and transfer it to another person, the price is very likely to change overtime,” says Grobler. “So I could send $200 worth of Bitcoin to someone, but as the price fluctuates they actually only get say $150. Bitcoin is really only going to be a better deal for someone who really understands financial markets and watches the price constantly. Further solutions need to be developed for mainstream adoption and tangible financial benefits.”
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