Bitcoin’s volatility, transaction fees, and network gridlock are minuscule issues compared to problems with Africa’s fractured financial system, according to BitPesa CEO Elizabeth Rossiello. Compared to that, it’s still a far more efficient payment network.
BitPesa, a Nairobi, Kenya-based payment platform, was founded in 2013. It aims to use bitcoin to ease commerce and payments where traditional financial markets are broken and/or expensive. The company furnishes alternative financial services for businesses to send and receive money in an inexpensive manner.
Epicenter co-hosts Brian Fabian Crain and Sebastian Couture interviewed Rossiello on the topic last week. They stated bitcoin transaction costs have been an issue for them and asked what effect they would have on people in a developing economy.
Rossiello countered by saying, “In places like this, honestly, the problems with bitcoin right now are a tiny blip in its inefficiencies in comparison to what I’m already dealing with.”
Broken Financial Infrastructure in Africa
Banking is a major issue for tech startups emerging in the continent. Africa is far from having the kind of robust financial infrastructure that many of us enjoy in other countries. Rossiello said even simple things others take for granted presented a challenge:
“The first two years we were in operation, we didn’t have a company credit card; we couldn’t get one.”
She also shared some more terrifying stories of the banking system in Africa.
“We had twelve bank accounts, but our local bank would only let us have a $5,000 credit card and we had to put down $6,500 in cash, which means we had to prepay more than we were allowed to spend. With one plane ticket from Kenya to San Francisco, [it] would break our whole balance. And then it took like four days to make the payment to get it back.” she said.
Bitcoin Is the Most Practical Payment Option
Bitcoin may suffer from network congestion and higher transaction fees. However, it is still the quickest and safest way to transfer money, she said. Even if the network takes hours or a day to verify payments, it is the most feasible option for transactions.
In the past, Rossiello has pointed out that African banks struggled to adopt expensive new technology, even when available.
“They didn’t know how to use it, there was no customer support that was local, it was super-complicated, they had to do migration from their old system to the new system, they might have used one functionality out of a hundred,” she said.
BitPesa has been a leading exchange platform in a number of African countries. Bitcoin is not the only volatile currency that BitPesa trades — it also exchanges Nigerian naira, one of the most volatile currencies on the continent.
June 2016 Reuters reported, the naira slipped heavily by about 30 percent against USD as the central bank removed its currency peg. The move was intended to assuage a currency shortage in Africa’s biggest economy.
An economy that has suffered from high inflation and financial instability is perhaps more likely to consider bitcoin as a payment method. Despite its reputation for wild price swings and now congestion problems, bitcoin may still be a safer bet both for trade and wealth storage, for businesses in the developing continent.
Will Bitcoin be the most traded currency in Africa, looking at the economic instability these African countries experience?
Images via BitPesa, YouTube