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

More

Dekstop/Flickr

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)

Social Security: The Greatest Government Policy of All Time?

Social Security is the most effective anti-poverty program in U.S. history. So why do some people hate it?


Elsewhere on the web

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

Video

Adventures in Legal Weed

Colorado is now well into its first year as the first state to legalize recreational marijuana. How's it going? James Hamblin visits Aspen.

Video

What Makes a Story Great?

The storytellers behind House of CardsandThis American Life reflect on the creative process.

Video

Tracing Sriracha's Origin to Thailand

Ever wonder how the wildly popular hot sauce got its name? It all started in Si Racha.

Video

Where Confiscated Wildlife Ends Up

A government facility outside of Denver houses more than a million products of the illegal wildlife trade, from tigers and bears to bald eagles.

Video

Is Wine Healthy?

James Hamblin prepares to impress his date with knowledge about the health benefits of wine.

Video

The World's Largest Balloon Festival

Nine days, more than 700 balloons, and a whole lot of hot air

Writers

Up
Down

More in Technology

Just In