The African continent is recording some of the strongest growth regarding cryptocurrencies. Africa is also breaking records in terms of adoption, retail transfer and use of peer-to-peer (P2P) platforms.
Africa and cryptocurrencies: 1,200% growth
A September 14, 2021 article from Chainalysis revealed an increase of over 1,200% in the cryptocurrency market in Africa, based on the received value of cryptocurrencies in 2020. According to the Chainalysis team, Africa is the smallest crypto economy where they conducted a study. However, the continent ranks 3rd in terms of fastest growth for cryptocurrencies. In fact, the continent received about $105.6 billion in cryptocurrencies between July 2020 and June 2021.
Africa also has the largest share of transaction volume consisting of retail transfers compared to other regions, at just over 7%, a percentage above the global average of 5.5%. Inter-regional transfers also account for a larger share of the cryptocurrency market in Africa, with 96% of all transaction volumes, compared to 78% for all other regions combined.
Finally, Africa is also seeing the highest local adoption of cryptocurrencies. Kenya, Nigeria, South Africa and Tanzania rank in the top 20 of Chainalysis’ global cryptocurrency adoption index.
The use of cryptos in Africa
P2P platform usage is highest in Africa compared to other regions, including 2.6% of all transaction volume for Bitcoin (BTC).
Paxful COO and co-founder Artur Schaback cites the difficulty of sending money from bank accounts on the continent as a reason for Africans’ enthusiasm for cryptocurrencies and in P2P transactions:
“If the government strictly limits the amount of money people can send abroad, they will get creative and turn to cryptocurrencies.”
Adedeji Owonibi, CEO and founder of Nigerian blockchain consultancy, Convexity, and Hub CBHUB, meanwhile, looked at the use of cryptocurrencies in Nigeria according to social groups. Middle-class youth use cryptocurrencies as a hedge against the devaluation of the local currency:
“Don’t rely on the naira. It’s too unstable. Put your wealth in stablecoins instead.”
The wealthy class is looking for an asset they can trade, where they can invest, to make money by speculating.
Who will be the first African country to follow El Salvador’s lead in legalizing Bitcoin? Zimbabwe with its self-professed cryptophile finance minister seems like a good candidate.