In major African markets such asNigeria, GhanaandKenya, informal…

Question Answered step-by-step In major African markets such asNigeria, GhanaandKenya, informal… In major African markets such as Nigeria, Ghana and Kenya, informal trading has stimulated a rapid but increase in bitcoin use[1]. Thanks to Nigeria’s tech-savvy young population, an unstable currency, and a high remittance activity, in late 2020, Nigeria ranked No. 2 in the world, behind the U.S. in bitcoin trading[2].Small businesses in developing countries are increasingly using Bitcoin to settle international transaction rather than in major international currencies such as U.S. Dollar and Euro. The banking application process is complex, which requires a many supporting documents and takes a long time. Moreover, even if a business’s application to make a payment in international currencies is approved, wire transfers are costly. Due to such practical uses, which is unique to developing economies such as those Africa, Bitcoin’s use has been reported to grow in these economies.Bitcoin has already gained some foothold in international business among developing countries. The crypto-denominated (in Bitcoin) international commerce has become increasingly common[3]. A Nigerian vendor of handsets and accessories, who sources his products from China and the United Arab Emirates reported that his Chinese suppliers prefer payments in cryptocurrency. He started paying with cryptocurrencies, which increased his profits. This is mainly because he did not have to buy US dollars using the Nigerian naira or pay expensive fees to money-transfer agencies. Due to such practical uses, which is unique to developing economies such as those Africa, Bitcoin’s use has been reported to grow in these economies. For instance, according to U.S. blockchain research firm Chainalysis, monthly cryptocurrency transfers of under US$10,000, which are typically made by individuals and small businesses, to and from Africa increased by more than 55% during June 2019-June 2020 to reach US$316 million[4].Chainalysis’ analysis showed a similar pattern in Latin America. During June 2019-June 2020, Latin America sent US$25 billion worth of cryptocurrency and received US$24 billion[5]. Chainalysis’ data showed that East Asia was Latin America’s significant counterparty[6]. The blockchain research firm’s interviews with Latin America-based cryptocurrency operators indicated that many of the payments were commercial transactions between East Asia-based exporters and Latin American importers.  A  Paraguay-based cryptocurrency exchange explained that businesses in Paraguay import significant amount of goods from China. Some of them are then exported to other countries such as Brazil. Many of the importers make payments using Bitcoin because of the speed and ease with which they can settle the payments. Due to concerns related to money laundering, banks in Paraguay are reluctant to do businesses with most companies. The banking application process is complex, which requires a many supporting documents and takes a long time. Moreover, even if a business’s application to make a payment in international currencies is approved, wire transfers are costly. Moreover, by making payments in cryptocurrencies, they can avoid import taxes[7]. Do you have examples of entrepreneurs that are using cryptocurrencies such as Bitcoin to operate/grow their businesses? Business MBA 718 Share QuestionEmailCopy link Comments (0)