Over the past few years, Africa has become a hotbed for cryptocurrency development. Statistics, trends, and analysis by industry experts all point to growing interest and use of Bitcoin and other cryptocurrencies.
In this article, we explore the state of crypto in Africa.
The early days
Globalization and the internet created an inter-connected world where people trade and make cross-border transactions. In the early 2000s, money transfer platforms like Western Union and Moneygram became very popular on the continent.
Other platforms also surfaced over the years to solve the issue of cross-border payments. Most companies stopped offering services to African countries, considering the market as ‘high risk” while the ones who stayed charged expensive fees. For instance, PayPal is not available in African countries like Ghana.
The launch of Bitcoin in 2009 opened up another opportunity for people on the continent to be connected financially. It was initially adopted by tech enthusiasts and has now become more popular over the years.
A major hindrance to the growth of Bitcoin and other cryptocurrencies were scams that swept through the continent in the early days. Due to this, most people associated cryptocurrencies with fraud. This classification was due to the spike in scam projects that used the cryptocurrency tag to market their Ponzi schemes.
For instance, Ponzi schemes like Mavrodi Mondial Moneybox (MMM) were very popular. Several investors lost money through these schemes, painting a negative picture of cryptocurrencies.
As education increased and more mainstream companies entered the continent, cryptocurrencies saw a spike in adoption.
One of the most popular use cases of cryptocurrencies is cross-border transfers. As explained earlier, there are few efficient platforms for sending and receiving money internationally. Moreover, the methods that exist are expensive.
Cryptocurrencies like Bitcoin and stablecoins solve this issue by allowing Africans to send and receive money at a fraction of the cost. What’s more, traditional methods come with several limitations that do not exist with crypto.
Another important use case of cryptocurrencies is that they can act as a store of value. Just like most developing markets, African currencies are likely to depreciate against the US dollar. To avoid losing value due to economic policies or situations, some people on the continent keep their wealth in Bitcoin instead. For instance, Zimbabwe has an inflation rate of 659.4% because the national currency is one of the world’s worst.
Further, cryptocurrency speculation or trading is also widespread in Africa. Several exchanges have recorded large volumes on the continent, especially in 2020.
Finally, cryptocurrencies present a unique opportunity for Africans. The crypto ecosystem has created an online economy that allows people to earn a living through jobs in the space. There are African developers, writers, and designers working with major crypto brands.
Growing interest in Crypto on the continent
Cryptocurrencies have become very popular on the continent in recent years. Extremely popular to the extent that Africa leads the rest of the world in the Google search for the word ‘Bitcoin.’
Further, research by firms like Blockchaincenter.net also indicates more interest in bitcoin from Africa than other continents. The Blockchaincenter.net research looked at the combined Google Trends data for several cryptocurrencies. The study concluded that 94.7% of the search interest came from Africa.
The availability of more crypto platforms and ATMs on the continent than before is another sign of growth. However, some roadblocks are making it more difficult to reach mainstream adoption.
Regulation and the future of Crypto in Africa
Most African countries are yet to pass regulations on cryptocurrencies. Countries like South Africa and Kenya have begun the process. On the other hand, active markets like Ghana and Nigeria do not have clear statements on cryptocurrency regulation.
Ghana’s financial regulators have issued warnings about investing in cryptocurrencies in the past. Also, Nigeria has seen similar sentiments. However, a recent statement from the Nigerian SEC released a statement on how it intends to regulate crypto businesses has shown signs of a better environment.
Despite negative regulatory sentiments, there is innovation going on in the crypto space from Africa. It will be exciting to see how Crypto in Africa evolves over the next year.