Should Africa Adopt a Shared Currency? And Should It Be Bitcoin?



I wrote on Monday about Sweden's move toward an ever-more-cashless society: The country is pointing the way -- with other European and North American countries following its lead -- toward ever-more-digital financial transactions.

Rüdiger Koch, a German software developer, wants to expand the cash-reduction trend to Africa. But he wants to take things a step further, too: Koch -- who is also a consultant to the bitcoin exchange Intersango -- argues that Africa should adopt a euro-style shared currency. And that that currency should be the Bitcoin.

An article in Technology Review explores the validity of Kock's arguments. "In the United States and Europe," Tom Simonite reports, "Bitcoin's meteoric rise was mostly driven by speculators; hardly anyone used the currency to actually pay for goods and services." The currency's exchange value has plummeted -- from $30 last summer to around $5 right now. In February, Tradehill -- the largest exchange where Bitcoins could be traded for dollars -- closed, citing "increasing regulation."

A Bitcoin economy might have better luck in Africa, though, Koch argues. The countries of Africa, after all, tend to differ from the U.S. and those of Europe in two significant ways: First, their centralized banking systems are (generally) weak. Despite quick growth in nations like Kenya and Nigeria, cash transactions are still standard -- "particularly," Simonite notes, "in rural areas where there are no ATMs and few people have bank accounts."

Second, mobile phones are on the rise in Africa. The number of mobile subscribers has grown almost 20 percent year-over-year for the past five years, the GSM Association reports, leading to expectations that there will be more than 735 million subscribers on the African continent by the end of 2012. "It may seem unlikely, given its track record in technological development," The Guardian's Killian Fox wrote last year, "but Africa is at the center of a mobile revolution."

So people are already carrying the tools that could facilitate Bitcoin-based exchanges, Koch notes. From there -- and particularly as prices for the phones that use Google's Android software continue to drop -- "the Bitcoin community," Koch argues, could create open-source technology that builds on mobile operating systems to create Bitcoin-based apps. Koch imagines "a design similar to the Bitcoin for Android app, which allows one person to transfer bitcoins to another by using a phone to snap a photo of a 2D bar code or QR code on the screen of another phone" -- creating a society and an economy in which "people could exchange money when they meet on the street." 

Or, well, "money." 

Jump to comments
Presented by

Megan Garber is a staff writer at The Atlantic. She was formerly an assistant editor at the Nieman Journalism Lab, where she wrote about innovations in the media.

Get Today's Top Stories in Your Inbox (preview)

CrossFit Versus Yoga: Choose a Side

How a workout becomes a social identity

Join the Discussion

After you comment, click Post. If you’re not already logged in you will be asked to log in or register. blog comments powered by Disqus


CrossFit Versus Yoga: Choose a Side

How a workout becomes a social identity


Is Technology Making Us Better Storytellers?

The minds behind House of Cards and The Moth weigh in.


A Short Film That Skewers Hollywood

A studio executive concocts an animated blockbuster. Who cares about the story?


In Online Dating, Everyone's a Little Bit Racist

The co-founder of OKCupid shares findings from his analysis of millions of users' data.


What Is a Sandwich?

We're overthinking sandwiches, so you don't have to.


Let's Talk About Not Smoking

Why does smoking maintain its allure? James Hamblin seeks the wisdom of a cool person.



More in Technology

Just In