In the wildest of claims, bitcoin – the virtual paperless and stateless currency transacted on the borderless internet – was going to tear apart traditional money transfer companies and help alleviate poverty.
Accessing the multibillion-dollar remittance flows to Africa certainly has substantial appeal, perhaps helping to attract some large seed investments in African bitcoin startups.
Firms have also sought to draw users to bitcoin by undercutting the high costs of international money transfers. Some of its backers even claim it could leapfrog traditional financial infrastructure on a continent where two-thirds of people are “unbanked”.
Parts of Africa have already come a long way in developing mobile money payment systems that give the unbanked millions a chance to move into the formal economy. Advocates of bitcoin on the continent say it would take this a step further, though it requires an internet connection which more than three-quarters of Africans still do not have.
A small group of users – mainly in South Africa, Kenya and Nigeria – trade speculatively in bitcoin via online forex sites, as they would any other asset.