The US bond market is shaking. Bitcoin is surging. Arthur Hayes is proclaiming "up only." Before we uncork the champagne in Africa, let's ask a critical question: is this a genuine opportunity for economic empowerment, or a gilded cage built on someone else's financial woes? Are we as likely to be on the verge of importing a new set of problems with that promise of digital gold?
"Up Only": Really For Everyone?
The narrative is seductive. The US dollar collapses, confidence in the traditional financial markets is shattered, and Bitcoin the decentralized upstart emerges stronger than before. The US Dollar Index (DXY) is crashing down, which over history has served as a launchpad for Bitcoin. Now we’re hearing Bollinger Bands calling bottoms and falling wedge formations forecasting six-figure BTC price.
Let's be honest. Up only Realizing this, “up only” seems amazing for anyone already bought in. What do we say to the millions of Africans aspiring to live more prosperous lives and simply move about their day? And what of the farmer in rural Kenya, the small business woman entrepreneur in Lagos, or the student in Johannesburg. But does a parabolic Bitcoin rally solve their immediate access to credit, or reliable electricity, or quality education?
Here's the unexpected connection: a rising tide lifts all boats, but only if those boats are seaworthy. Corruption, low financial literacy and weak regulatory frameworks characterize African economies. In such an environment, the disproportionate effects of Bitcoin’s rapid gains would deepen existing inequalities.
A volatile asset such as Bitcoin, which has proven itself to be susceptible to enormous fluctuations, could decimate savings funds in a single day. Scammers and fraudsters, sensing blood in the water, would have a field day scamming people who shouldn’t be put to this risk. The energy-intensive reality of Bitcoin mining could overwhelm already overloaded power grids, siphoning resources from hospitals and schools.
Bitcoin has proven to be an incredible tool for financial freedom. It allows citizens to evade venal state actors and repressive monetary authorities. There's truth to that. It has the potential to provide an alternative to banking as we know it, making transactions faster, cheaper, and more transparent.
Freedom From What, Exactly?
Freedom is more than having access to a shiny new technology. It’s not just about having knowledge and resources, but power to make informed decisions. Continue getting that important seat at the table, figuratively speaking of course, when the rules are being written.
Are African countries truly ready to regulate Bitcoin in a way that fosters responsible innovation while protecting consumers and the financial system? Are financial institutions going to be ready to make Bitcoin work with their current practices, or are they just going to try and fight it? And are people really prepared with the financial literacy to assess the complexities of the crypto market?
Perhaps Bitcoin is not the answer but rather an answer. Beyond Bitcoin and Ethereum there’s a world of alternative cryptocurrencies and blockchain technologies that is worth exploring. Equally, we should look at CBDCs as being more tailored to the unique operational requirements of African economies.
What if instead we started looking beyond price appreciation? Let’s lead with blockchain to make supply chains more transparent, procurement of public goods more resistant to corruption, and land registries more efficient.
A Different Kind of Digital Future?
Here's the truth: the US bond market crisis and Bitcoin's potential rally are a wake-up call. Our global financial system is constantly changing. Therefore, it is imperative that Africa takes bold, well-coordinated steps to determine and secure its own digital future. We are not able to just import solutions from the West. We have to create our own plans, rooted in our own communities’ unique values and priorities.
We shouldn’t be fooled by the siren song of “up only. Let’s work together to build a digital future that is inclusive, sustainable, and most importantly empowering for all Africans. It calls for an even-handed approach, emphasizing education, proper regulation, and limited, responsible innovation. It's about more than just price. It's about people.
Because it’s mostly true, the “up only” narrative really gets folks fired up. We need to be careful and critical about it, because it could take us down some perilous paths. That’s the real trap. It really would be a trap if we fail to construct our own vessel ahead of the tide coming in.
Let's not be blinded by the allure of "up only." Let's instead focus on creating a digital future that is truly inclusive, sustainable, and empowering for all Africans. It requires a balanced approach, prioritizing education, regulation, and responsible innovation. It's about more than just price. It's about people.
The "up only" narrative, while exciting for some, could be a dangerous siren song if we don't approach it with caution and a critical eye. It is a trap if we don't build our boat before the tide rises.
