Why would it cost $40 to pay $100 for a legal service between a Ghanaian and a Nigerian? Are payment rails making life easy for people or killing economies and stealing from their hard work? Is there a possibility of having a better system that is more transparent, cheap, accessible to all, and fast?
Jack Mallers, CEO and founder of Strike, explained at the African Bitcoin Conference in Ghana that Bitcoin and Lightning present the best payment rail for the entire world, especially for Africa, which loses a lot of money to external settlement systems outside the continent.
History of payment rails
Describing payment rails and how they started, the CEO said that payment rails, which are systems that guarantee the transfer of value from one point to another, started in the form of human hands. Humanity started using their hands to exchange value and send assets and money before the current systems we see today.
Although the “hand system” was free, fast, and transparent, he added that the transition into the industrial age demanded that it be changed. This was because trades became more complex, with larger volumes of money to be transferred across thousands of miles around the world.
Jack pointed out that although checks came in, as promissory notes, to replace the “hand system,” the advancement of the human race needed a more flexible and robust digital system to handle the demands. Thus, there is a situation where central banks around the world coordinate how payments are made alongside payment platforms.
But while these new systems have broken the walls of distance, allowing larger transactions to be done, payment settlements have slowed down compared with the old “hand system.”
The situation in Africa
The Pro-Bitcoiner noted that the “55 currencies and 41 central banks in Africa” situation presents a huge challenge in making payments better as there is no unified central bank in the continent, like in the world, that takes care of settlements of all central banks.
This has caused many delays and backdrops where for example, most African nations depend on the US dollar and, in effect, the Federal Reserve to take care of its intra-continental transactions. The effect? Jack noted that Africans in Africa pay more to send and spend their different currencies in Africa, and this figure has grown to $5 billion.
This works in such a way that African currencies, for example, Ghanaian Cedis need to be converted to the US dollar in the US before it is converted back to the Nigerian Naira, like the situation mentioned at the beginning of this piece.
Why Bitcoin and Lightning?
Instead of using the current payment system, which is not efficient, bitcoin and lightning offer a far better option, Jack explained. The cost to use it is negligible; it does instant settlements, can be accessed by anyone anywhere, and can take any size of transaction.
He added that using Bitcoin and Lightning will make banks unnecessary as anyone can access bitcoin as the global central bank that settles all transactions transparently. Products like Bitnob and Strike can help make these happen where a Nigerian can receive money from Africa and anywhere in minutes.
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