Tether has been supercharging finance in Africa in recent years. But what exactly is this digital currency, and why are more and more Africans turning to it for their needs? Let's break it down.

What is Tether?
Tether (USD₮) is a digital currency known as a stablecoin. While you might have heard of volatile cryptocurrencies like Bitcoin known for their wild price swings, stablecoins are different. They're designed to maintain a stable value by being pegged to a traditional fiat currency.

Tether Tokens are called stablecoins because they offer price stability and a low-volatility solution when utilizing digital currencies. This means one Tether (USD₮) is worth one U.S. dollar. All Tether Tokens are pegged at 1-to-1 with a matching fiat currency and are backed 100% by Tether’s Reserves. Think of it like the digital equivalent of exchanging your local currency for U.S. dollars at a forex bureau.

Why is Stability Important?

Many African countries face challenges with their local currencies:

High Inflation: Some countries see inflation rates above 20%. In simple terms, if a loaf of bread costs $1 today, it might cost $1.20 next year due to inflation.
Currency Depreciation: In Ghana, for example, the Cedi lost over 25% of its value against the U.S. dollar in 2023. This makes imports more expensive and affects anyone saving for overseas expenses like education.

When your local currency is unstable, it's hard to plan financially. Stablecoins like USD₮ offer a way to store value in a more stable form.

How Are Africans Using Tether?

Everyday Shopping: Imagine you're a vendor in a busy market. Accepting cryptocurrencies like Bitcoin is risky because its value can drop significantly before you can cash out. Transacting with Bitcoin also makes it difficult to calculate payments, and it wastes time, unlike USD₮, which is pegged to the value of a fiat currency. Companies like Ivory Pay are making it easy for businesses to accept USD₮, just like they would accept mobile money.
Sending Money Home: Many African families rely on money from relatives working abroad. Traditional remittance services can charge fees as high as 20%. Using USD₮, people can send money almost instantly, with fees often below 1%. This means more money reaches the families who need it.
Hedging Against Inflation: Many developing countries experience inflation from time to time. Inflation can derail your plans if you're saving for a big expense like a house or your child's education. More Africans use USD₮as a "digital dollar" to protect their savings from local currency devaluation.
Easy Access Apps like Yellow Card let you buy Tether USD₮ using local currency through familiar methods like bank transfers or mobile money. When you need local cash, services like Fonbnk and Minipay help you convert USD₮ back into your local currency.
Remittances and Cross-Border Payments: USD₮ facilitates easy and cost-effective cross-border transactions without having to worry about hidden fees, long processing duration, fluctuating exchange rates, amongst other things. USD₮ gives you the luxury of owning a US dollar without the need to go through the strict process of opening a dollar account in Nigeria. It serves as a Bank for the Unbaked population because, with your phone, you can transact globally and conveniently using USD₮. For students schooling abroad, USD₮ is a fast, safe, and effective way to preserve the value of their fees and allowances.

Why is This a Big Deal for Africa?

Financial Inclusion: Over 350 million African adults are "unbanked," meaning they lack access to traditional banking. Because stablecoins are more accessible, they could boost financial inclusion by up to 30% in the next decade.
Economic Stability: When local currencies are unstable, it affects everything from household budgets to business investments. A stable digital currency can provide some economic certainty.
Cross-Border Trade: A Kenyan trader can easily do business with a supplier in Egypt using USD₮ as a common, stable currency, opening up new inter-economic opportunities.
Financial Education: As more people use stablecoins, they're learning about concepts like digital wallets, exchange rates, and inflation. This growing financial literacy has long-term benefits, gradually equipping people with the required knowledge to make informed financial decisions in the rapidly evolving digital space

In Conclusion

Tether, the largest company in the digital asset industry, aims to teach emerging markets like Africa about the power of digital finance, helping communities leverage blockchain technology for financial inclusion and economic development. It serves the unbanked population and solves real-life problems like unstable currencies, high transaction costs, and limited access to financial services. It offers a way for people to transact, save, and plan more effectively.

As more Africans explore this "digital dollar," it's sparking conversations about the future of money. Is a world where stable, accessible digital currencies empower individuals globally on a global scale just around the corner? Africa's growing use of USD₮ suggests we're definitely moving in that direction.