Now picture that same grandmother in rural Kenya, cut out from the formal financial system and unable to borrow money or even safely save her limited income. Her case is not an anomaly—this population constitutes the largely disproportionate unbanked population in Africa. For decades, traditional finance has failed her. Now, rumors of altcoins – Bitcoin’s younger, faster, more exciting siblings – are stirring up the potential for a revolution. Is it a real lifeline, or just another shiny object that draws our attention away from what are really some big systemic issues? To explain why it’s complicated is like trying to explain Johannesburg rush hour on a Friday afternoon on a holiday weekend.

Africa's Financial Exclusion: A Stark Reality

The numbers paint a grim picture. Millions more are cut off from formal banking across the continent. This exclusion creates a poverty trap that is aggravated by predatory lending practices and lack of access to basic financial tools. We’re discussing the lives of actual Americans, their families and communities. Beyond a number to reel off at a summit, young people are the hope and promise of Africa. Traditional banks would deem these individuals as too risky to serve. They think unprofitable customers just get ignored because they can’t afford to matter to corporations. This is where the appeal of alternative coins or altcoins comes into play.

Can altcoins really be the key? They provide greater opportunities for borderless transactions, reduced transaction fees, and decentralized control, avoiding the traditional banking gatekeepers. Think about remittances. Beyond speculation, altcoins are already allowing families in America to send money home, instantly and directly. They eliminated high-profile, high-fee, money transfer service middlemen, saving families tens of millions of dollars. This is not only about money, this is about dignity.

Altcoin Season: A Glimmer Of Hope?

The crypto space is currently buzzing with the idea of an “altcoin season.” According to some reports, 23% of all altcoins right now are outperforming BTC. Historically, altcoin rallies have started in June since 2022. The Altcoin Season Index, which measures the performance of altcoins versus Bitcoin, is signaling an impending altcoin explosion.

Here's the thing though: past performance is never a guarantee of future results, especially in the volatile world of crypto. Just because Web3 funding is back to 2019 levels prior to the 2021 altcoin pump doesn’t mean that the same will happen again. It's like saying because my soccer team lost every game last season, they're guaranteed to win this one.

The key lies in understanding the why. Altcoin rallies typically occur when Bitcoin is consolidating or correcting, allowing altcoins the opportunity to come into the spotlight. Stronger altcoin/Bitcoin trading pairs, record decentralized exchange volumes and active user addresses are just the beginning of evidence pointing to real interest, not temporary hype. Stripe’s recent acquisition of crypto marketing startup Privy, to better integrate crypto wallets, is another example of commitment from traditional players.

The Dark Side: Risks and Realities

Let's not get carried away. There are grave risks that need to be mitigated. Regulatory uncertainty looms large across Africa. Regulators are having a hard time figuring out how to regulate new technologies in the best way possible. Without transparent technology and innovation-friendly frameworks, everyone loses, and bad actors and scams win. In addition, a lack of infrastructure, especially when it comes to reliable internet access and digital literacy, poses a significant barrier as well. What’s the point in a cool crypto if you don’t even have reliable internet access to engage with it?

There's the potential for exploitation. Unscrupulous actors might take advantage of these communities, enticing them with promises to make them rich quick only to leave disadvantaged communities worse off. We’ve seen this song and dance with other technologies in the past. If we’re not careful, the potential for innovation can turn into a new instrument of repression.

Realistically, here’s why altcoins are not a panacea. As it is, they are a tool—even a godsend, in some respects—and like any tool, they can be used for good or for ill. If altcoins are to genuinely be a force for opportunity for Africa’s unbanked, we require a multi-faceted strategy.

  • Education: We need to educate people about the risks and rewards of altcoins, empowering them to make informed decisions.
  • Regulation: Governments need to develop clear, fair, and proportionate regulations that foster innovation while protecting consumers.
  • Infrastructure: We need to invest in infrastructure, including internet access and digital literacy programs, to ensure that everyone can participate in the digital economy.

Altcoins are not inherently good or bad. Their impact on the future will be determined by how we decide to use them. Or we will use their promise to enrich the privileged and further entrench an exclusionary financial system. Or will we continue to let them be another tool for chasing profits through exploitation, deepening the divide between haves and have-nots. The choice, as always, is ours. And the stakes, as ever, are through the roof. If we don’t, we may end up reinforcing the same inequities that we say we’re trying to combat.