A shift in cryptocurrency usage patterns in Africa has caught the attention of industry leaders. Russell Okung, a professional athlete with a keen interest in digital currency, noted while in Africa, the growing preference for dollar-backed stablecoins over Bitcoin. Despite his efforts to popularize the Lightning Network, Okung found that the local population favored the stability of the dollar, even in digital form.
Dollar Stability Outweighs Cryptocurrency Fluctuations
This trend is not unique to Africa; similar patterns have emerged in other economically challenged countries like Lebanon and Argentina. The reason behind this shift appears to be the populace’s inability to handle the volatile nature of cryptocurrencies like Bitcoin, making the dollar a more secure alternative in uncertain financial climates.
Practicality of Stablecoins for Everyday Use
Austin Campbell of Zero Knowledge Consulting reinforced these findings, drawing from his experience as Chief Risk Officer at Paxos Trust Company. Campbell pointed out that stablecoins, such as USDC, are increasingly becoming the currency of choice for everyday transactions, while volatile cryptos are relegated to the role of value storage, akin to gold’s function in the economy.
He further highlighted the dual challenge currencies face in being both liquid and a store of value. Campbell’s observations suggest that the reliance on USDC indicates a broader transformation happening in the way local currencies are viewed and utilized across various nations.
Witnessing the shift first-hand, the author identifies a common sentiment among cryptocurrency investors in their home country: holding cryptocurrencies pegged to the dollar is seen as indirectly maintaining dollar reserves. The trend of keeping assets in dollar-backed stablecoins is prevalent and reflects a significant change in the financial ecosystem.