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Saved As Bitcoin, Spent as Fiat Currency: Are Africans Now Saving In Cryptocurrencies?



Natalie (Flickr)

“If I have money I don’t need presently, I’ll definitely change it to cryptocurrency and let it gain in value.”  This is what Mr Adeyemo Sunday had to say when asked him if he would save his fiat currency in the bank or instead, as a cryptocurrency. 

Switching from his bank app to his crypto wallet, he pointed out one by one, reasons why he thought cryptocurrency was brilliant for long term saving. From remittance fees to several bank charges, one could understand why he preferred to save in his cryptocurrency wallet.

Money has come a long way from the days of bartering to commodity money, and to fiat. Money doesn’t possess any value in itself, it only has value because people know it will be accepted as a form of payment. Money evolved because economic activities became heavy. Trade by barter could not sustain the amount of economic activities that were taking place across the world. 

Commodity money came and it still wasn’t enough. By the time Marco Polo traveled the silk road in A.D. 1271 and was trading in with paper currency, one could tell the fiat currency was the ultimate means of exchange and savings. Or, is it?

Although fiat currencies are efficient for spending, they may not be as efficient for savings. Leke Abiodun,  a Bitcoin enthusiast says “If it’s not in my crypto wallet, then, it’s buying me stuff.”

READ ALSO: The Best Bitcoin Books For Beginners

In the climes we are currently in, saving is more important than spending. According to crypto-trader, Adams Ola, “With the rate of consistent devaluation of foreign exchange, I believe smart investors and indeed, wise millennials  would adopt/hedge their investment in an asset class that defies the economics of state owned currency…”

It is a fiat-booby-trap.” Kunsha Javed believes the fiat currency was designed to keep us in debt. He says it will keep leaking out of our hands like water. “Any wise person will tell you saving money helps in life, but that is old and boring. Also, it never happens.”, Javed told 

It doesn’t just leak out of hands, in some cases, it vanishes into thin air. Kunsha’s metaphor is quite accurate, but water isn’t the only element fiat currency can be likened to. It vanishes into thin air, and in some cases, burns out like fire. 

Rainy Days’ Savings Ironically Drenched in Rain

In Ghana, it rained on the savings of 70,000 thousand people. $1.6 billion was drenched in the rheums of the fiat currency. In a bid to clean up the banking system, the Ghanian government left many in financial ruin. A high level of financial crime needed to be curbed, but innocent investors were caught in the crosshairs.  “The government needs to step in to build confidence again,” the words of Lord Mensah, a finance lecturer. But does the financial system need a makeover or a complete overhaul?

Like Adeyemo and Abiodun, a number of people are beginning to change how they save. The traditional safes in which they keep funds seem to occasionally metamorphose into a ravenous fiat eating beast. 

Numbers don’t lie. The number of people who would save as cryptocurrencies outweigh those who would save as good old fiat. According to 73% of Argentines prefer the cryptocurrency saving method. Of the 1,113 people who participated in the survey 69.5% had invested in cryptocurrency at some point. 

An evolution is imminent. Could fiat, the ultimate form of money be gradually going through an evolution? 

The trend in far-away Argentina isn’t so different here in Africa. The current economic situation has also increased cryptocurrency activities in Africa. Cryptocurrency transfers have risen by 56% this year. Last year alone, $8 billion worth of crypto was received in the continent. The main reason for this hike are remittances and fiat currency devaluation.

Daniel Whyte isn’t a cryptocurrency enthusiast or trader. He has never had anything to do with blockchain technology, but he has heard of it. 

“If you had enough money to spare, would you save it as cryptocurrency”? asked Whyte. 

” I would consider it… I believe the world is going there now, but I don’t have a full picture.”, he replied. Although Whyte admits that he could join the crypto movement, he further emphasises that he would only do so after much consultation. His desire for a surety is only logical, as not all tales of the “new money” leave a juicy taste in the mouth. There is certainly room for doubt.

Ola Jegede gives a more practical picture of the difference between fiat saving and crypto saving. “If I bury $100 in the ground for 2 years by the time I dig it up I won’t be able to afford what was $100 two years ago. If I do the same with Bitcoin….more value.” He says.

With Stablecoins, Cryptocurrency Volatility is Minimised

Fiat currencies aren’t as volatile as cryptocurrencies. Their values change from time to time but the changes are not as severe as with cryptocurrencies. So why put your money in something so unpredictable?

Samuel Attah, blockchain enthusiast and writer, has a way round the volatility of these cryptocurrencies. “Stable coins.“, he says, though still a cryptocurrency, these coins are pegged to something else like the US dollars, for example. So while an African currency depletes, saving it as a stable coin pegged to a stronger currency retains and increases its value while it remains stable.

Money only holds value because people let it hold value. It is quite evident that a lot of value is being attached to cryptocurrencies. Next money or not, the current financial system is becoming inefficient and a change is imminent.

Crypto or Fiat: What’s your preferred method of saving your money?

Let us know your thoughts on this using either of the comments box.

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Bolu Abiodun is a recent graduate of Theatre and Media Arts, Federal University Oye-Ekiti. A journalist with over a year's experience on the job. A former editor at American Media company Project Forward, he is a skilled content creator, social media manager and digital marketer.

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  1. Adeyemo

    7 October 2020 at 12:45 PM

    I think the point made by Mr Samuel Attah should be looked into….yes we all think crypto currency is the only way we can save our money and earn as the value increases but then it’s only favorable to the foreign currency [USD]….As this currency increases in value so does our local currency [NGN] losses it’s value so I will say; as much as we invest in crypto we should not neglect our local currency also

  2. Anonymous

    15 September 2020 at 7:49 PM

    The world is changing! So is what makes the world go round; money!

  3. Anonymous

    15 September 2020 at 4:58 PM

    It only makes sense to save as crypto. You loose value saving as fiat.

  4. Anonymous

    15 September 2020 at 3:12 PM

    Nice one

  5. Tobi

    15 September 2020 at 11:57 AM

    It makes sense to save as crypto though

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Crypto Assets

Crypto prices drop as global market fear increases



Top cryptocurrency prices have fallen amidst a drop in stocks and fears over China’s Evergrande debt crisis. In the last 24hour, Bitcoin dropped from $47,772 to $42,630 shedding about 8.58%. this is the lowest in price since another bull run began on Sept 5 after the April crash.

El- Salvador’s President, Nayib Bukele sees the fall as an opportunity to invest more. Recall that the country adopted Bitcoin as a legal tender on September 7. Despite the adoption, the price of Bitcoin has fallen by almost 14% since then.

Other coins have experienced dramatic crashes within the last 24hours. Solana, a coin that has experienced 355% growth within the last 3 months fell from $162 to $130 shedding about 11.39% within the last 24hours. Solana’s fall may be categorized by the 17-hour outage which the founder, Anatoly Yakovenko said was caused by bots “flooding the networks”

Ethereum fell by 9.37% while Dogecoin and Axie Infinity fell by 11.22% and 14.14% respectively within the last 24hrs hours. While crypto experiences dark Monday, El-Salvador keeps investing more money in Bitcoin.

A look at the global market

The global market is experiencing fear due to the Evergrande debt crisis. A report published by the University of Michigan shows that consumer’s sentiment is beginning to decline. This trend alone may impact the crypto market as well.

On the other hand, the global market downturn must have been spurred by the Evergrande debt crisis. The company grew to be one of China’s biggest companies by borrowing more than $300bn. Last year, Beijing made rules to control the debt owed by big real estate developers. This led Evergrande to offer its properties at major discounts to raise more money to keep the business afloat. Right now, the company is struggling to meet the interest on payment of debts.

Why would it matter if Evergrande fails?

The collapse of the multi-million dollars company would affect the global market; including the crypto market. Many people bought properties from Evergrande and they expect to make gains. If Evergrande falls, crypto investors will be forced to withdraw more money to keep their business running without the means to invest more. When one business fails, the other gets affected indirectly. This also applies to other firms that do businesses with Evergrande.

The potential impact on China’s financial system is another effect of Evergrande’s fall. In his statement to BBC, Mattie Berkink, the Economist Intelligence Unit (EIU), said that “the financial fallout would be far-reaching. Evergrande reportedly owes money to around 171 domestic banks 121 other financial firms” if the company fails, other lenders or businesses may be forced to lend less. Thereby leading to a credit crunch- a situation where companies struggle to borrow money.


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Bitcoin in Africa

The rise of CBDC in African economies



Many nations have taken cues from the world of crypto and its resounding successes over the last decade. In order to avoid getting left behind, governments worldwide are increasingly turning their attention towards implementing some form of digital currency, a CBDC which in full is Central Bank Digital Currency. Although inspired by cryptocurrencies, CBDC’s are quite different from traditional crypto platforms. The main differences are that CBDC’s are unlikely to be decentralized, the supply of this currency regulated by the host’s country’s central bank as the CBDC is designed to operate as a sovereign legal tender, the digitized form of the host country’s fiat currency. Thus, a central bank may issue digitized tokens of its currency of which their value is pegged to the fiat currency of the nation in question, making CBDC’s stablecoins.

Africa has seen a rise in the use of cryptocurrencies and it’s still pushing frontiers in this sector. Although the use of crypto in many African nations is becoming more and more pervasive by the day, the tone of governments in many of these countries toward the sector is cautious at best and threatening at worst. However, a few nations have voiced interests in creating digitized versions of their legal tender to function as a CBDC. Amongst these are Ghana, Nigeria, Morocco, Kenya and Tunisia.

Many of these projects are still in the research phase or developmental phase however. A good example is Ghana’s proposed CBDC, the E-cedi being developed in partnership with German company, Giesecke + Devrient. Nigeria’s CBDC project, the eNaira has been announced and according to Nigeria’s central bank, this CBDC will be launched sometime in 2021. To that end, the CBN has partnered with fintech company, Bitt Inc. to serve as the technical partner in the eNaira’s development. Reportedly, the CBN had made the decision to digitize the Nigerian Naira in 2017.

While the pursuance of digital currencies in African nations is a welcome development, implementation of these schemes isn’t without challenges. Chief among the issues countries in Africa face would be the already existing financial service inequality and poor penetration of internet access in the continent. These challenges must be tackled in order to allow for mainstream adoption of CBDCs and the subsequent provision of financial inclusion. The benefits largely depend on the peculiarities of the nation deploying them. For instance, a digital currency is thought to help Nigeria increase foreign remittances, it’s second largest source of forex after oil. Whatever the outcome of these projects, it is becoming apparent that CBDC’s have come to stay.

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Decentralize Brief

Bitcoin trades above $51k ahead of El Salvador’s adoption



Bitcoin growth

Bitcoin price has rallied above $51,000 ahead of El Salvador’s adoption. The immediate surge in price may be due to the social media campaign that everyone should buy sats of Bitcoin to support El Salvador’s plan to make the coin a legal tender or it may be due to the news of El Salvador’s adoption of the coin as a legal tender on September 7. Users of social media platforms like Twitter and Reddit are discussing how they will buy Bitcoin of $30 each to mark the new El Salvador Bitcoin law.

The surge in Bitcoin’s price began in the last 24hrs with the price rallying around $51,955 with a 3.37% increase. This is an all-time high after the April crash that brought the price of Bitcoin from $64k down to $28k. The move by El Salvador to be the first country that accepts Bitcoin as a legal tender and the social media campaign that leads to a surge in price ahead September 7 are a repetition of events that occurred late last year and early this year with regards to institutional investors and how the price of Bitcoin skyrocketed.

El Salvador, a country in Central America, has been preparing heavily to adopt Bitcoin by installing ATMs to allow citizens to convert the token into US dollars. Last week, the country’s Legislative Assembly passed a law to allow for the creation of a $150m Trust to support the conversion of Bitcoins to US dollars.

To promote the use of Bitcoin, the government states that it will give the adult population of El Salvador $30 in Bitcoin once they download “Chivo” the wallet issued by the government. This was confirmed by the Finance Minister, Alejandro Zelaya.

What this means for Bitcoin investors

Apart from the adoption by Salvadorians, on-chain analytics show that Bitcoin is in high demand. The fourth halving that occurred will make Bitcoin become a scarce token in the nearest future. Thereby increasing the price sporadically.

With El Salvador’s interest in Bitcoin, other countries are likely to follow suit- Panama is considering following El Salvador’s lead. History will repeat itself as this development will serve as another crypto rout that occurred early this year when Tesla and MicroStrategy announced their support for Bitcoin.

El Salvador’s new law allows the use of Bitcoin as a legal tender it can be used to buy goods, pay for taxes and bank loans. This means more demand for Bitcoin, with the fourth halving that occurred, it means less supply. A common rule of economics for demand and supply will apply. Prices are projected to keep rising. At the time of writing this report, Bitcoin is trading at $51,839 with a projection of $52k before the end of today and higher tomorrow when Salvadorians begin to use the token.

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