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 percent 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 percent. 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.
What if that money could be spent on things, rather than fees?
As Bitcoin is a virtual peer-to-peer currency—designed to operate on the border-less internet—the costs of transferring money can be radically cheaper than traditional methods, and the process is much quicker.
“Bitcoin can greatly alter the remittances industry and beyond,” says Michael Kimani, who heads the African Digital Currency Association, a Kenya-based group launched last May to promote digital currency technologies. “From seven days [for a transaction to clear] using banks & PayPal, down to 20 minutes speaks volumes.”
Beam is a service in Ghana that converts Bitcoin sent from abroad into the local currency, cedi. Since launching three months ago, it has attracted 30 users who pay a 3 percent fee on each transaction rather than the average 12 percent from traditional transfer services.
Ghana received $1.7 billion of remittance income in 2012 according to the Bank of Ghana, and Beam’s founders are optimistic about the future.
“Bitcoin is going to make a huge difference when it starts to get accepted by merchants in Ghana,” says CEO Nikunj Handa. “People won’t need to change Bitcoin to any other currency so there will be no broker fees involved and people can get really very low-cost transactions. But Bitcoin is in its early days yet, and we need banks and merchants to catch up.”
And the founders are also planning to launch “Value Remittances”—a service which will allow people in other countries to use Bitcoin to pay the water, electricity and phone bills for their family members in Ghana.
Read more at CNN
