May 24
Africa's cryptocurrency market has had a meteoric rise, fueled by a tech-savvy young generation interested in alternative investments and by public and private institutions interested in using emerging technology to find lasting solutions to local problems.
Africa is one of the fastest growing crypto markets in the world according to a report by Chainalysis, a blockchain data firm
Primarily, cryptocurrency has been adopted as a digital finance tool that is connecting people and businesses through modern transactions while opening new frontiers to the continent's population without access to banking systems.
But beyond the democratization of finance, the digital currency has pointed out to users opportunities that range from economic participation, the improvement of cross-border trade, the reinforcement of financial resilience and the reduction of the digital divide. It has been instrumental in instilling trust and accountability in governance and highlighting human rights abuses where it would traditionally be difficult to do so.
For example, in South Africa, a country that fights against poaching, technicians and environmentalists have embraced cryptocurrencies in their conservation companies to create loyalty programsallowing investors to adopt endangered species and contribute to wildlife conservation in a model that is generating impressive dividends.
But these emerging technologies have also been criticized as a result of their negative effects. Impact on the environment. This is mainly due to its energy-intensive nature during transactions, as players mine new coins. for example, a bitcoin transaction It will use approximately 2,100 kilowatt hours, the equivalent of the energy a typical US home would consume in 75 days. Bitcoin's annual carbon footprint equates to the release of some 97.3 tons of carbon dioxide, further detailing the digital currency's contribution to greenhouse gas emissions.
There are also consumer protection concerns due to the high volatility of coin prices and the collapse of some major cryptocurrency exchanges.
While the potential of digital finance on the continent continues to excite Africa, despite growing concerns about potential risks to the environment, financial systems and consumers, actors such as governments and the private sector need to re-examine about the effect of digital currencies on the environment and social. welfare and progress in its regulation.
Image by Shubham Dhage
