Efforts to get Bitcoin off the ground in Africa received a boost this week as BitX announced it has raised $4 million in funding.
Africa is a market ripe for Bitcoin: it’s underserved by financial institutions due to the high cost of having a physical presence like ATMs, bank branches and remittance offices, according Werner van Rooyen, head of business development and growth at BitX.
The company was founded in 2013 and runs a bitcoin exchange and provides wallets for the cryptocurrency. Its headquarters are in Singapore and it has offices South Africa, Indonesia, Kenya, Malaysia and Nigeria. The Series A funding round was led by South Africa’s Naspers Group.
“There’s a lot of talk in finance of ‘the next billion’ and a big part of this next billion will come out of Africa,” Werner said via email. “Bitcoin is particularly great when you have low-value payments since there isn’t a fixed minimum fee that gets charged to send it.”
Another advantage for bitcoin in Africa is the high level of mobile phone penetration, Werner said. “Soon anyone will be able to download a bitcoin wallet on their Android device, transfer some bitcoin in and make payments, be it to the person sitting next to them or sitting on the other side of the world.”
Earlier this month, BitX launched a bitcoin exchange and services in Nigeria. It joins ICE3x in that market, which launched the country’s first bitcoin exchange in January.
Meanwhile, startup Bitsoko recently won a $100,000 grant from the Bill & Melinda Gates Foundation, which it will use to expand its bitcoin services from Kenya, where it’s now in beta, to other countries in the region.
“Bitsoko is building a user Bitcoin wallet and merchant payment processor that will allow people to spend Bitcoin at any merchant that currently accepts mobile money. We offer the merchants extended tools such as analytics, customer loyalty program, payroll software, and more to make their payment system easier,” said Daniel Bloch, head of business development.
One such merchant is Basaka, a backpack company in Sierra Leone, Bloch said. “They are our first Bitsoko powered company as we will be assisting them in accepting payments and converting their funds into Splash mobile money.”
Bitsoko is also among the 30 startups selected from 600 applicants for this year’s DEMO Africa pitching event slated for Nigeria in September.
Bitcoin’s success in Africa requires three things, according to BitX’s Werner: companies like BitX that continue to engage with government regulators, developers building more innovative products and uses for the cryptocurrency, and simply getting more people to start using it as a means of transacting business.
Bitsoko’s Bloch believes that in five years, there will be Bitcoin companies in every country in Africa. Key to that growth is building platforms for other developers to use, he added, and Bitsoko aims to be the platform for others to create innovative applications.