How Cryptocurrency (Bitcoin & Tether) Helps Businesses in Africa
With virtually everything now existing in the digital realm, businesses have never been more able to reach their target audience
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You could start your small business today and start reaching prospective buyers almost instantly. The really cool thing, though, is that your buyers are not necessarily confined to the same location as you. So your little business that sells handmade pots for plants in Accra could find a buyer in Lagos, Nigeria just by posting it online.
Now, think of not just a really small business, SMEs and big organizations benefit from this and even have expansion plans ready that they roll out as they grow because, indeed, the world is a global village. Particularly, the nature of African economies has almost naturally created more entrepreneurs, so that individuals now actively work on solutions to problems that have kept the economy stagnant, or offer services that simply put a smile on people’s faces, regardless of their location.
However, as fast as the entrepreneurial space is growing and more needs are being met, businesses still face some major challenges that have often stifled growth and efficiency.
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Payment Challenges facing African businesses
African businesses often encounter various challenges, yet there are common challenges that many business owners that operate online can easily relate to – payment. As the internet keeps playing a crucial role in business operations across the world, many fintech solutions have sprung up that aim to help businesses solve the payment problem with their customers, regardless of their location.
And luckily, the need is widely acknowledged by investors – we saw African payment company Flutterwave raise $170 million early this year and Paystack get acquired by Stripe in the last quarter of 2020. These point to signs that investors and businesses are interested in finding a lasting solution to these challenges.
Yet, some fundamental issues remain unaddressed: behind the scene of many fintech operations is fiat. Realizing that fiat money is notorious for devaluation and incessant inflation puts this challenge in perspective. In addition, using fiat for cross-border payment is unattractive for many reasons – the chief of which is the cost of transactions. Sending money as payment often attracts exorbitant charges and in some cases impossible for some regions.
Crypto offers payment solutions to businesses
The use of cryptocurrencies as a medium of exchange has grown rapidly over the last year. While many still see crypto as an investment option, bitcoin was created to solve the problems government-issued currencies face. Bitcoin is decentralized and digital. The fact that it operates on blockchain technology which reduces or eliminates the need for middlemen thus reducing transaction costs makes it a perfect solution to payment problems faced by businesses.
And while bitcoin is borderless, making it easy for anyone anywhere to receive it as payment for goods and services, its volatility discourages many from using it for payment. You could hold $1000 worth of bitcoin now and in 5 minutes, it could be worth $900. As a business owner, this may lead to a loss on your end.
However, because the technology behind bitcoin, the blockchain, has created a way for other cryptocurrencies to exist, stablecoins were created to solve the problem with bitcoin’s volatility. Stablecoins are cryptocurrencies that share the characteristics of cryptocurrencies (decentralized, digital, protected by cryptography) and other assets (like gold or US dollar). One of such stablecoins is Tether (USDT). Tether is pegged to the US dollar so having 100 USDT is the same as having US$100.
The implication of this is that you can now do with cryptocurrencies as you could with fiat currencies – without all the problems that fiat money faces. And this is made even easier and smoother in Africa thanks to crypto fintech company Yellow Card that is making it easy to buy and sell cryptocurrencies in Ghana and many other African countries.
Yellow Card is creating a network within Africa that is aimed at easing the use of cryptocurrencies for both private use and for inter-country trades. What this means is that your customer in South Africa can buy bitcoin or tether with rand on Yellow Card and send it to you in Ghana where you can sell it and get cedis into your bank account or MoMo account directly.
With Yellow Card making payments and trades easy for businesses in Africa, we can expect to see growth and efficiencies within businesses going forward.
Credit: Joel Ogunjimi
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Source: YEN.com.gh
Ebenezer Agbey Quist (HOD Human-Interest) Ebenezer Agbey Quist is the Head of the Human Interest Desk at YEN.com.gh. He has a BSc in Chemical Engineering from KNUST (2017) with 8 years of experience as a writer and 3 years as an editor. He has certificates in AFP courses on digital investigation techniques. At YEN.com.gh, Ebenezer has won the Outstanding Achievement for Professional Conduct Award and the Best Human Interest Editor Award. He is also the author of 3 books. You can contact him via ebenezer.quist@yen.com.gh.
Aba Afful (Copyeditor) Maame Aba serves as a copy editor at YEN.com.gh. She naturally enjoys working with words and has an eye for quality content. She has a keen interest in cyberspace and wants to see YEN.com.gh produce more impactful, thought-provoking, and error-free content. Aba has five years of experience as a content writer, blogger, author, and proofreader. She graduated from the Ghana Institute of Journalism in 2017. She joined the team in 2021.
