How COVID-19 is accelerating digital currency uptake in Africa

The past month has seen a steep uptake of cryptocurrencies with Bitcoin in particular seeing an almost 50% jump. But what does the future hold for crypto on the continent? According to the Executive Director of the Africa Blockchain Institute, Kayode Babarinde, COVID-19 has accelerated the adoption and use case of digital currencies across the world. With approximately $3 trillion printed in 2020 alone, equivalent to about 20% of the total amount of US dollars in circulation, the need for more financial funds has become evident. The pandemic has pushed institutions and governments to explore alternative financial solutions, leading to a surge in investments in cryptocurrencies. Institutions like Debbie Morgan have increased their cryptocurrency holdings to facilitate transactions and keep their businesses afloat. The speculation surrounding digital currencies has been on the rise, with Bitcoin surpassing the $20,000 mark. This trend signals a significant shift towards digital assets, revolutionizing the monetary landscape. While some view this transition as a monetary revolution, Babarinde emphasizes the evolving nature of technology and the need to adapt to changing trends. He draws parallels to the evolution of communication methods from postal services to email, highlighting the continuous progression of technology. The surge in Bitcoin valuation, with a nearly 140% increase by the end of the year, can be attributed to financial institutions seeking alternative investment opportunities amid economic uncertainties. The devaluation of traditional currencies and the impact of lockdowns leading to recessions have also driven the demand for digital assets. Babarinde notes that institutions are heavily investing in cryptocurrencies, with significant purchases recorded recently. This influx of institutional funds into the crypto market has contributed to the spike in Bitcoin prices. African economies and central banks are also considering the integration of digital currencies. Babarinde emphasizes the importance of regulating digital assets to ensure government revenues and promote financial stability. African governments, aligned with the African Continental Free Trade Agreement, are exploring the integration of cryptocurrencies into the Pan-African payment system to facilitate trade and business transactions across the continent. Central banks are also exploring the possibility of issuing central bank digital currencies to streamline financial operations. In the coming year, Babarinde predicts a further surge in crypto adoption as businesses and countries seek innovative solutions in the aftermath of COVID-19. With speculation around Bitcoin reaching new heights, the crypto market is expected to witness substantial growth. African nations, particularly Nigeria, are at the forefront of embracing digital currencies, signaling a positive shift towards technological advancement. As the digital currency landscape continues to evolve, 2021 holds promising opportunities for the widespread adoption of cryptocurrencies in Africa.