Many exciting developments are occurring in the distributed ledger technology (DLT) and blockchain space in the world and in Africa. Much opportunity exists in the continent to leverage the benefits of blockchain in reducing costs, increasing efficiency, and ensuring trust and security in a myriad of applications. The technology is still in its infancy but as it gains in popularity and trust we should see it flourish.
There has been a surge of interest in cryptocurrencies (which are based on blockchain technology) such as Bitcoin amongst millennials in Africa. The appeal of Bitcoin and other cryptocurrencies is that it often requires less time than other pursuits and has no upfront costs in trading. However, it still remains quite a gamble given its great volatility and fluctuation in value over the short term. Cryptocurrencies have the potential to disrupt remittances in Africa of which many rely on. Participants are finding cryptocurrencies to offer a cheaper solution to the expensive problem of transferring funds across borders.
This Trade Brief introduces the reader to the DLT concept, particularly its application in the blockchain, and provides an overview of how this technology works, a brief history of its adoption, prospects for future use, and its relevance in the trading economy of Africa. The paper then highlights the challenges, applications and opportunities for adopting this technology in the African economy as well as its potential in simplifying the value and supply chain in trade. Adopting regulations for blockchain and DLT technology should lend a certain degree of credibility and further encourage its uptake as a reliable and secure medium of exchange.
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