Bitcoin Bulls Against the Dollar Doves – Africa Might Lead the Case for Implementing Bitcoin as a Global Reserve Currency
....and it could open up at least $30 billion in value for Bitcoin
“13 African Countries Should Buy Bitcoin…..Right Now”
Recently, Papa-Wassa Chiefy Nduom, Vice President of Groupe Nduom, a leading financial holding company in Africa, came out to build a case for Bitcoin (BTC) as opposed to the greenback. “13 African countries should buy Bitcoin…..right now,” he said on Twitter and LinkedIn recently. His proposition stems from the fact that a lot of African countries are totally reliant on the US dollar for their reserve currency.
Bitcoin Bulls Against the Dollar Doves
Bitcoin (BTC) has seen phenomenal growth over the past year. In the year 2017 alone, the price of one BTC soared from ~$950/BTC to $13,685 /BTC in 2017; that’s a whopping 1340% return in just 1 year. So, while the Bitcoin bulls are definitely out there, one should also take heed of the Dollar doves. The ICE dollar index, which measures the dollar against a basket of six other currencies, fell by nearly 10% in 2017. That’s the biggest annual decline since 2003, when the US dollar fell by almost 15%.
The decline of the US dollar causes specific concern for emerging markets such as Africa, whose reserves are largely dominated by the greenback. Bloomberg reports, “The dollar is predicted to decline against 12 of its 16 major peers next year”. Now, with the greenback already weakening and being predicted to drop in value further this year, countries that have a majority of their reserves in the US dollar, stand to make a significant loss.
Moreover, if you look at Bitcoin nodes globally (chart above), you’ll find Africa in “a very conspicuous dark spot,” highlighted Nduom. Nduom thus sees Bitcoin as a chance for Africa to build a borderless group,while at the same time not failing to admit that it may not be an easy task to have reserves on a public blockchain. We’re already seeing African countries such as Sudan, Kenya and South Africa reporting a surge in Bitcoin use over the past year.
What Kind of Opportunity Does That Open up for Bitcoin?
The US dollar’s dominance in global currency reserves is undeniable. As of IMF data reported for 3Q17, 63.5% of the world’s allocated reserves (54.2% of total foreign exchange reserves) were held in the US dollar.
Now, African countries reported over $111 billion in reserves in 2016. South Africa alone reported foreign exchange reserves to the tune of $50.3 billion (in November 2017). And a good proportion of that is in the US dollar. So, if the African continent were to start considering keeping their reserves in the form of Bitcoin, that should open up at least $30 billion in value for the cryptocurrency.
The move, if worked through, should also help build on the market’s dwindling opinion on Bitcoin as a store of value.