While regulatory uncertainty continues to weigh down growth
of digital currencies, cracks are growing within the regulatory world.
It appears Asian countries have made the decision to take
the lead on crypto-currencies and this will give them an advantage over the
dithering United States in particular. According to Global Data’s survey, the
adoption of crypto-currency wallets has majorly been driven by the availability
of smartphones in those countries.
Often, the US takes the leadership role in almost every
other sphere and the results are clear, America remains the most innovative
nation on the planet. Yet on this one, the position is up grabs as resistance
to cryptocurrencies continues in much of the rest of the world.
Japan has been bolder
than the rest when it comes to embracing Blockchain technologies, and recently it
gave thumps up to Coincheck, which suffered
a $530 million hack in January of last year, according to a report by Coin
Desk. This decision clearly underlines Japan’s aggressive approach, which is
not beholden to fear mongering.
Buying with Bitcoin
in Japan
Already Japan’s lead is enhancing trade with African
countries, particularly those with difficult economic conditions. Popular
Japanese based companies like car seller, Be Forward now
accept Bitcoin as payment. Cheap used Japanese made vehicles are a hit with
many on the African continent, and adoption of crypto-currencies by Japan gives
those previously precluded from buying, the chance to buy directly to the
seller.
The seamless Bitcoin payment option contrasts with the usually
arduous process, which involves several financial institutions.
Normally, for such a transaction—buying a vehicle—there are
two approaches. First, if the country’s currency situation is relatively stable,
you will be able to apply to get foreign currency via your bank. It is quite a process
but a lot of that happens behind scenes.
Once approval has been given by the central bank, funds are then
transferred to the receiving party in Japan. A process to deliver the vehicle or
anything else you are buying begins immediately after.
However, if the foreign currency situation of the country in
question is desperate, then you will be forced to get this resource elsewhere,
and that place is often called the black market.
Sourcing US dollars outside the banking system in places
like Zimbabwe can be risky business, because there are specific laws that bar
buying or selling foreign currency on the black market or the open market,
where it is available to everyone.
Apparently the government blames this black market for
fuelling the steady depreciation of local currency against global currencies hence
anyone caught buying or selling will serve
jail time!
So you begin to see Japan’s leadership in this context, a
decision thousands of miles away is now enabling not only Zimbabweans, but those
on the continent with Bitcoin, to buy from Japan without having to worry about
running afoul of national laws.
Japan’s stance is very much in contrast with that of many
African countries that have banned use of crypto-currencies because of terrorism
and money laundering concerns. Invoking these terrible phrases into the crypto-currency
conversation helps to augment a government’s stance on Bitcoin.
It is ironic that Japan, a country with a GDP in excess of US$4
trillion, saw the potential of Blockchain technology and after studying the
risks, took a decision to incorporate them into the mainstream anyway.
On the other hand, African countries whose combined GDP is
less than half that of Japan, still see the danger of crypto-currencies to
their citizens, thus justifying laws that ban their use. It is trite that some
opponents of crypto-currencies on the continent still make reference to the
volatility of Bitcoin and alt-coins as justification for restricting their use.
It should be noted that national currencies are equally
volatile, if not worse. This continent-wide risk aversion is largely
responsible for the continent’s underdevelopment. The continent’s best minds
are often forced to migrate to countries that encourage creativity.
Regulation should come after, not before a new product comes
to life. If that had been the approach of the United States this entire time,
then it is safe to assume we would have never had the internet, smart phones
and that cutting edge communication technology and so on. Or alternatively
these products would have been produced elsewhere and not in the United States.
It would have not been possible for Uber or Lyft to come
along because people naturally resist change but smart people embrace change
because it makes them better in the end. It is inconceivable that the whole
African continent lags in areas like crypto-currencies considering the kind of
human capital it has.
Nevertheless, African
entrepreneurs and innovators need to sell their ideas directly, to the
potential customers or users, instead of wasting time trying to convince
backward regulators or leaders. When there is enough buy-in by the general
population, an innovation will survive. For now that should be the focus,
African regulators are currently clue-less, they do not know how to respond to the
growth of crypto-currencies, they wait for guidance from the IMF or other
regulating bodies.
When Mpesa and Ecocash came along, the some tried to have
their growth stifled because the applications threatened traditional banking
operations. However, the mass adoption and the financial inclusion that these
entities brought made it impossible to oppose their use in the end.
Blockchain innovations should have a similar approach if
they are to see better adoption.
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