Countries in Africa are steadily becoming more interested in cryptocurrency. A few market speculators state it is a subversive development that will bloom in the continent.
Although the mention of Africa as one of the largest markets for the cryptocurrency is rarely made, the continent is making waves in the financial technology sector, recording many transactions in digital currencies.
Zimbabwe residents are among the African countries that have recorded massive numbers in bitcoin transactions rather than their local currency which is currently affected by hyperinflation. Up until now, it seems Nigeria, South Africa, Kenya and Ghana are home to the quickest developing networks of bitcoin clients on the continent.
Because of high transaction fees and currency instability levels in African, many people in the continent are turning to cryptocurrencies for financial transactions and lower fees.
Over 55% of Africans plagued the cryptocurrency sector with massive amounts of transactions last year. Many Africans are choosing cryptocurrency over real money as a means of exchange.
Why Africa chooses cryptocurrency transactions
Reports from blockchain analytic firms indicate that many residents and businesses use digital currencies to escape high transaction fees, currency instability, and regulatory complications.
These small value transfers are most likely P2P transactions rather than actual payments for services. But the recent surge of safe online casinos in Kenya that accept BTC payments may show a much darker reality. A majority of those transactions could be transferred to the casino to avoid bank surveillance that fiat transfers would cause.
More than 600,000 monthly transactions have been recorded to move to and from Africa. This year, the transactions to and from Africa totalled up to $316 million in June, a 55% leap. The continent’s leading countries in cryptocurrency transfers are Nigeria, Kenya, South Africa, and Ghana.
A majority of small business owners in Nigeria, such as cell phone vendors in Lagos are beginning to use bitcoin to pay their providers. And most local businesses move to cryptocurrencies for speedy transactions and comfort.
Business owners included that payment strategies helped them dodge high charges and was a better option in contrast to buying progressively costly USD. Inflation in many African is very high leading to a high demand in and the cost of buying the USD. In the last decade, the currencies of several African countries have fallen drastically against the USD, including the South African Rand.
Different interviewees revealed to Reuters that Bitcoin payments additionally help the individuals who have relatives living abroad in nations like the U.S. furthermore, the U.K. to send cash back home. A majority of Africans living overseas in countries such as the UK and USA use bitcoins to transfer money to their friends and family members back home.
As indicated by a post by the World Bank, fiat fees for settlement in Sub-Saharan Africa cost 8.9% all things considered, with South Africa recording the greatest expenses of up to 20% per exchange. While bitcoin fees are very low, normally below3%. The estimation of digital currencies sent to Africa in 2020 is set to outperform the previous year’s overall sent transactions of about $8 billion, with nearly $1 billion sent in June only.
On the other hand, in 2019, the World Bank announced that just $48 billion worth of standard currency was sent to Sub-Saharan Africa, expected to drop to $37 billion this year. Many more investors in African countries are getting into the crypto world, abandoning their local currency for a more discrete, quick, and cheap means of exchange. Local banks are trying to incorporate as many digital processes in their system as possible, to catch up to the ever-developing world of fintech.