At the moment, the popularity of cryptocurrency investing has piqued the interest of people all over the world. Africa is a continent that does not desire to be behind the trend of blockchain and cryptocurrency usage. Blockchain tech underpins cryptocurrency that includes such types as Bitcoin and Ethereum (Soomro et al., 2022). A cryptocurrency is a type of virtual money that employs encryption to authenticate the ownership of a unit of financial value (Walton & Johnston, 2018). Perceived utility and availability to favorable conditions were the critical criteria affecting African users’ choice to accept the cryptocurrencies (Jankeeparsad & Tewari, 2018).
Blockchain has many advantages since it offers enormous promise in a variety of industries, including the financial sector, social networks, and the Internet. Despite this promise, there are several difficulties to address in the use of blockchain (Kesa, 2019). The first type of cryptocurrency, Bitcoin, might have issues such as liquidity, security infringement, and unethical mining (Campbell-Verduyn, 2017). Data optimization and blockchain development are two approaches to addressing sustainability and liquidity (Kesa, 2019). To mitigate confidentiality leaks, mixing has been suggested. Finally, unethical mining may be avoided by employing randomized transmitters and timestamps that allow miners to pick new blocks.
Furthermore, the emergence of cryptocurrency poses a severe threat to many existing banking operations. Cryptocurrencies use a peer-to-peer method to cut out the mediator, which might be a financial intermediary (Härdle et al., 2020). For instance, to operate in the realm of cryptocurrency, no bank account or bank card is required. A crypto-wallet does fulfill the same purpose as a bank vault (Härdle et al., 2020). Considering that over two billion people do not have bank cards, there is the possibility of a shift in financial intermediation with devices and the internet.
Hence, the cryptocurrency started to gain attraction not so long ago, which made it famous in Africa as well. While many people might find cryptocurrency unstable, the lack of intermediaries, availability, and utility made it especially interesting to people who live in Africa. Nevertheless, there are specific challenges that come with cryptocurrencies. These include problems with liquidity, security infringement, and unethical mining. Moreover, cryptocurrencies might lead people to stop using intermediaries when it comes to financial transactions.
References
Campbell-Verduyn, M. (2017). Bitcoin and beyond: cryptocurrencies, blockchains and global governance. Taylor & Francis.
Härdle, W. K., Harvey, C. R., & Reule, R. C. (2020). Understanding cryptocurrencies. Journal of Financial Econometrics, 18(2), 181-208.
Jankeeparsad, R. W., & Tewari, D. (2018). End-user adoption of bitcoin in South Africa. Journal of Economics and Behavioral Studies, 10(5), 230-243.
Kesa, O. (2019).Rwandacoin: Prospects and challenges of developing a cryptocurrency for transactions in Rwanda. Carnegie Mellon University.
Soomro, B. A., Shah, N., & Abdelwahed, N. A. A. (2022). Intention to adopt cryptocurrency: a robust contribution of trust and the theory of planned behavior. Journal of Economic and Administrative Sciences.
Walton, A. J., & Johnston, K. A. (2018). Exploring perceptions of bitcoin adoption: The South African virtual community perspective. Interdisciplinary Journal of Information, Knowledge, and Management, 13, 165-182.