Rising Demand for Crypto in Africa

more Africans are embracing cryptocurrencies

Cryptocurrencies have become more popular recently, mostly due to speculative factors. The prices of different cryptocurrencies have achieved staggering three-digit returns, encouraging traders to buy them and leverage the opportunity to make a profit quickly. Indeed, profit seeking is among the main drivers of a wide crypto adoption. However, in emerging markets, and in Africa in particular, there are other factors that are increasing the demand for crypto assets, such as meeting the need for financial services.

Nigeria Becomes First in Crypto Trading in the Continent

The recent years have seen a rise in peer-to-peer trading in Africa. Nigeria is still the leader in the continent, despite the recent crackdown by the government. Ghana and Kenya took second and third place, respectively. South African ranked fourth as it lost some ground in this domain.

Large Crypto Trading Volumes in Africa

Between January and March 2021, Trading volume in Nigeria exceeded $99.1 million. In Kenya, it was $38.4 million. In Ghana, it was $27.4 million and in South Africa, it was $25.8 million. In 2020, Nigeria had a record-breaking $309 million in Bitcoin trading volume, more than three times that of South Africa’s $98.4 million for the year. In addition to Bitcoin, trading of Altcoins such as Litecoin has grown in popularity in South Africa and elsewhere on the continent and is possible through trusted brokers such as easyMarkets.

Regulations around Bitcoin in Africa

Kenya has pushed forward strongly with its central bank considering using Bitcoin as a reserve currency. This establishes the currency as a store of value and shows that it has the backing of a central governmental authority, giving people a psychological impetus to accept it. Ghana’s central bank also made regulations easier for companies and startups around Bitcoin.

South Africa and Nigeria took an opposite stance. Nigeria banned the use of cryptocurrency and prevented its banks from processing transactions that involved bitcoin. South Africa was hit hard by a Ponzi scheme conducted by Mirror Trading International which was based in the country. Authorities in South Africa criticized the use of cryptocurrencies following the incident, although they stopped short of banning it entirely.

Thriving Cryptocurrency Based Services in Africa

Luno-exchange, which is a crypto trading platform based in South Africa, was established in 2013, and it features over 40 million users worldwide. It is among the many cryptocurrency projects in the continent. Other services include remittance services, such as Abra in Malawi and Morocco, GeoPay in South Africa, BitMari in Zimbabwe, and Kobocoin throughout Africa.

Factors Driving the Increasing Demand for Cryptocurrencies in Africa

There are several factors behind the high rate of adoption of crypto in Africa. Among those are the following:

  • First, currency inflation and hyperinflation drive people away from national currencies to decentralized cryptocurrencies.
  • Second, the high rates of corruption also make national currencies unappealing.
  • Third, Africa has a young population in general, which is more likely to use cryptocurrency than the older generation that tends to be more skeptical.
  • Fourth, a lot of people do not have access to the traditional banking system, and thus lack access to necessary financial services. With cryptocurrencies, this gap can be closed, and many people can get access to needed services such as sending and receiving money.

Africa is at the forefront of crypto adoption in the world. This can pave the way for faster economic growth in the continent. As countries are already growing, crypto can accelerate that trend.

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