Many experts are starting to say that the crypto industry is either dead or on its way to an early grave. But there are millions of people still involved with the assets, how can something be irrelevant when a significant portion of the earth’s population is involved with it? Well, it depends on the way we interpret these experts’ analysis.
Most of them refer to how cryptocurrencies will never be what they once were at the end of 2017. And that’s simple to understand. In fact, that is realistic, that such hype is not to be expected anytime soon. However, what these experts neglect is the fact that cryptocurrencies don’t need to be so overpriced to be relevant in our world. This means that even if they fall flat on their face once again, they will still find use. But where?
Many people believe that the more cryptocurrencies are implemented in a region or a country, the more potential it has to be the next hub for the industry. However, that has been proven inaccurate as South Korea quickly started regulating the assets due to rampant ICO scams, the United States still trying to wrap its head around the whole thing and the UK being relatively passive.
Once something has been implemented, there is much less room to grow compared to a place that has no similar infrastructure. That is why the continent of Africa is considered to be the best location cryptocurrency companies can tap into.
This is also reinforced by the fact that Africans are much more interested in cryptocurrencies than other markets. This is confirmed by Google trends statistics. Furthermore, South Africa was named as #1 in terms of cryptocurrency possession, and Forex brokers in Kenya have started to adopt crypto payments as well as crypto CFDs.
Overall, the crypto market for Africans is in its beginning phase. Those who tap into the market during this phase are guaranteed to have a loyal customer base further in the future.
Why is Africa such a lucrative market?
The nature of the cryptocurrency market is determined not by the size of their investors, but the number of them. This means that the more people are involved, the more the industry has a chance to develop.
Although Africa can’t really field investors with thousands of dollars in capital, they are still able to contribute millions with smaller portfolios. Just having those small amounts constantly be in motion is enough to drive the price of even the smallest coins.
Furthermore, Africa is a haven for banking companies, and since this is the industry where cryptocurrencies shine the most, it’s the best market to tap into.
Currently, there are only a few countries in Africa that have some sort of regulatory framework introduced for cryptocurrencies. One of the most developed of them is South Africa, which is now considering some amendments.
The existence of this Grey Zone type of market gives the crypto companies freedom to start operations with relatively low costs. But despite such freedom, there are challenges that need to be overcome
The biggest issues
Having a continent-wide operation system requires a lot of skilled labour. This is easily surpassed through remote workers all across the world, but at that point, the key feature of Africa loses its relevancy.
Africa is very cheap in terms of labour, taxes and electricity prices for mining companies. Because of this, it is in the company’s interest to employ the local population. However, one of the largest issues is that there is a very small pool of skilled labour. Which means that these companies will have the largest competition in this department.
Most of them would have to out-play each other to employ the best of the best. Which drives the labour argument even further. Because of this, they’d either have to import skilled labour or develop it locally, which can take years.
Growth is an asset in itself, but it can quickly turn into a problem. In the beginning, when the companies are in their development stage, the governments will tend to ignore them to some degree.
But the lucrative nature of the African market guarantees fast growth, which is sure to be noticed by the local Finance ministries.
Because of this, we can expect that these companies will have to start pumping out more taxis from their revenue, as well as reporting client activity on their platforms. This is a phenomenon that we’re seeing with pretty much every developed country. Where companies are being forced to report client activity and their profit margins.
This is done for the extra revenue tax on individuals. Much like any other financial market, cryptocurrencies are considered as traded goods, which, according to the law is taxable. The only thing required is a small amendment to include the asset in there. Since developed countries have already implemented it, there will be nothing stopping the Africans as well.
Therefore a clear growth plan will need to be implemented.
Is the African market worth it?
Even though these issues can cripple a company, the vast resource of potential customers cannot be ignored by crypto companies. Even if the profit of a year’s operation is just $1 million due to taxes and restrictions, it is still a profit, which then creates space for growth.
Having an influx of millions of customers on the cryptocurrency platform is sure to drive some of the coins to heights never seen before. In fact, experts predict that should the implementation of cryptocurrencies in Africa go smoothly, we can expect new major Altcoins. Overall, the market capitalization of cryptocurrencies can expect an influx of billions of dollars due to the adaptation of such a large market.