'Pray Blocks Happen Quickly' As The High Fees Make BTC Less Appealing In Africa
Know the situation in Africa regarding the Bitcoin. Where are the experts viewing the situation in the country? The discussion throws light on the best coins available in the crypto market.
How Is Bitcoin Doing In Africa?
Despite the ongoing concerns about the high network fees, bitcoin trading volumes are on the rise on the African continent. Starting in April the data shows peer to peer bitcoin trading platforms recording spiked growth in volumes. Right at the same time was countries implementing lockdown measures
COVID-19 related regulations were the reason for the volume growth as anecdotal evidence seems to suggest. Already one of the biggest cryptocurrency markets in the world, this evidence is observed in Nigeria. Helping to build new momentum for bitcoin as well as altcoins as some observers from the country say is the struggling economy as well as the volatile currency.
They now show to illustrate how the corona virus-induced drop in oil revenues has thereby put increased pressure on local currency. Inevitably leading to capital flight and scarcity of foreign currency is the increased pressure on local currency.
Between March and August 2020, the available data shows the Naira, the Nigerian currency has thereby depreciated by 33% from about 360 to 480 units for every USD. Some banks have limited the amount of USD Nigerians can withdraw each month ensuing the shortage of hard currency.
Inevitably leading to growing interest in alternatives like cryptocurrencies as Nathaniel Luz, Lead for Dash in Nigeria explains, that the scenario recently played out in many African countries that are similarly affected by the closure of economies.
More Nigerians are keeping their money in crypto as Luz says the reason is increased instability of the Naira.
Why Are The Transactions Fees High?
The high transaction fees associated with a bull market, as Luz argues is particularly on the Bitcoin network proving to be an unwelcome dynamic.
As Luz explains, serving as a good advert for newbies to get on board bull runs generates a lot of excitement and optimism of the crypto space in general. Due to the mempool being full with every bull run we see increased fees and slow confirmation times for bitcoin transactions.
Hence we see it used as the leading cryptocurrency that comes less appealing as an alternative means of transacting or remitting funds.
Chris Maurice, CEO at Yellowcard Financial exhibits sentiments echoing Luz, where the digital currency exchange helps Nigerians in the Diaspora to send funds home using bitcoin.
Seeing growth in volumes is the organisation according to Maurice although here he admits that the high transaction fees definitely impacted them on the operational side.
Hereby Maurice now shares a strategy that his company has adopted to minimise the impact of the high fees to try and mitigate the problem.
At around 2-3 am EST as everyone in the US is asleep and the chain is a little calmer, they move BTC constantly and at this point only moving bitcoin. Praying that blocks happen quickly and the coins don’t get caught for 24 hours or more, he sends with a reasonable fee of $20+.
While it is sure that using higher fees helps get transactions confirmed faster, whereas one bitcoin trader from Zimbabwe, William Chui explained that the final transaction cost is set to be much higher.
As Chui adds, the final cost, therefore, renders moot the appeal of bitcoin for remittances
Here the challenge remains that as they pay a premium already to get the BTC as they need to make the transfer, the fees are high and further impact them.
All About Banks Barred From Cryptocurrency
Banks are barred from interacting with cryptocurrency exchanges in countries like Zimbabwe. Hence it is seen that traders have the informal crypto markets as the only source for getting bitcoin. Thereby charging a premium on top of the going bitcoin price is informal dealers for their effort.
Ranging between 5% and 10% is the premium and this comes before adding the network transaction fee to the total cost.
As Chui explains, helping to get a transaction approved quickly is the fees of about $8, or else the people play the lottery paying a lower fee and possibly wait for 3 days for it to clear.
Just to send bitcoin worth $100, this means the sending party incurs a minimum cost of $13. When compared to traditional remitting channels, these costs make remitting funds via bitcoin less appealing.
Who Are The Newcomers To Cryptocurrency?
The bull markets have had both positive and negative aspects to it as Grey Jabesi the founder at Crypto University and Buy Bitcoin Malawi argues. Further, he explains the positive part first as it is observed that increasing volumes from beginners are in it for speculation as also there is still a steady growth of those that want cryptocurrency working for what they want to do.
Subsequently, Jabesi is admitting the same bull market makes bitcoin less cost-effective for border remittance while it is the common use case for cryptocurrencies on the African continent. As BTC’s fees rose as much as 550% last month, he ties the growing interest in alternative coins to BTC’s high network fees.
The Opportunity For BCH
By those that want to use cryptocurrency for legitimate reasons, we are seeing a shift from bitcoin to mainly bitcoin cash. As there is also interest in XRP in some cases.
BCH seems to be preferred alternative because it is not only cheaper and faster but also because it is accepted as the payment on many online retail market places according to Jabesi.
Maurice on the other hand insists that bitcoin still remains the king despite the high network fees admitting they look to add BCH on the Yellowcard platform.
Consequently, he explains that
They are actively working on listing it as they get requests pretty often for BCH. Especially in Africa, however, BTC is still king. To get people switching, he thinks even with the high fees right now, it takes a large educational push around BCH.
Seeing growing interest by users that want faster and cheaper fees is Dash. One platform Coinprofile.co has already added Dash to the list of supported coins according to the Dash leader in Nigeria.
While We Wind Up
As Maurice suggested an educational campaign accompanying any marketing push, it seems BCH, Dash, and XRP are all poised to diminish Bitcoin’s dominance in Africa.
To get more from the growing market, success on the front helps these cheaper and faster alternatives