Developing economies are once again leapfrogging prior waves of technological innovation with the help of cryptocurrency.
Much like the way consumers in India and Indonesia a decade ago skipped landlines for cellphones, institutions in Africa are embracing the advancements in crypto over alternatives offered by the traditional plumbing of the global financial system.
As Elizabeth Rossiello, founder of the Africa-focused fintech platform AZA Finance, described at Yahoo Finance’s All Markets Summit Plus conference, crypto is helping improve everything from issues around Africa’s cross-border payments to operating during banking holidays tied to a dollar-dominated system.
“When we’re trading between continents that don’t involve the dollar, why should we be using dollar legacy infrastructure? That might sound radical, but it really doesn’t make a lot of sense to trade from West Africa to the U.S. and then back to South Africa in almost a triangle,” she said.
Instead, the institutions in the more than 100 countries her company operates in have increasingly turned to crypto trading to operate more efficiently.
As Rossiello described, some financial institutions have taken up using stablecoins, or cryptocurrencies that are meant to stay pegged to the dollar, instead of having to transact in dollars attached to the traditional banking system.
It’s not universal across the board, and much more of a complimentary option rather than a replacement in its current scope, but it’s another option in the toolkit that has been tapped by some institutions working with her company since it launched the first Africa-based crypto exchange.
“In our basket of over 100 currency pairs that we trade, digital currency pairs are right alongside it,” she said.
“And so when there’s a U.S. dollar holiday, for example, in North America, we don’t need trading to stop in West Africa or South Africa or trade between Africa and China. So digital currencies really provide a necessary solution, not just for investing in a future asset class, but also in infrastructure for settlement of foreign exchange and frontier markets.”
At a time when U.S.-based crypto coverage focuses so much on speculation and price appreciation, it’s intriguing to see how crypto is being utilized around the world — especially after El Salvador adopted bitcoin as legal tender.
For Rossiello, who also serves as co-chair of the World Economic Forum’s Council on Blockchain, it’s more reason for regulators to embrace what crypto can unlock at a faster clip.