In the past year (May 2020 to June 2021), the African continent has been the most dynamic one with the best growth prospects in the cryptocurrency sector, according to a report by Chainalysis.
Cryptocurrency volumes rise as African people gain awareness
Not only have the trading volumes increased by 1200% compared to last year, but the level of Bitcoin adoption has also grown tremendously.
According to the 2021 global Crypto index adoption, as many as five countries on the African continent occupy the top twenty positions, Kenya (4) Nigeria (5), Togo (9), South Africa (!6) and Tanzania (19).
The volume of peer-to-peer transactions on the continent is becoming increasingly popular among the African population, partly because many people do not have bank accounts and in this case cryptocurrencies offers a cheaper, safer and faster alternative for foreign transfers.
The high inflation rates of many local currencies also make Bitcoin and other cryptocurrencies very attractive, especially to the weaker sections of the population.
All peer-to-peer platforms have experienced very high growth rates in countries such as Kenya, Nigeria, South Africa, Tanzania and Zimbabwe. But cryptocurrency transactions have literally exploded across the continent.
Africa the next frontier for crypto?
The African continent is considered by many to be the new El Dorado, both because of the wealth of raw materials underground, the fact that it has a very young population (226 million between the ages of 15 and 24) and the growing interest of large sections of the population in new technologies.
This is why digital currencies represent an important resource for them to escape from the shackles imposed on them by countries with more developed economies in exchange for aid and expensive loans.
Cryptocurrencies are widely used for remittances from abroad. Many African banks have imposed strict limits on outgoing money to foreign countries.
However, it is difficult to know how much of the roughly $50 billion total remittances to sub-Saharan countries have been made in Bitcoin.
Chainalysis points to an exponential increase in payments under $10,000, suggesting that many of these may well come from remittances.
Nigeria and Kenya, two of the most crypto friendly countries in the world
In a recent survey by Statista on the propensity to use cryptocurrencies in 74 countries around the world, Nigeria came out on top, with a third of its citizens who participated in the survey saying they use or hold cryptocurrencies.
According to the bitcoin trading platform Paxful, Nigeria would be second in terms of Bitcoin trading volumes.
Also according to Chainalysis data, Nigerians in July received about $2.5 billion, up from $690 million in December.
Nigeria, with one of the highest youth rates in the world and an economy that can rely on huge reserves of raw materials, is looking with increasing interest to digital finance.
Kenya, another of the continent’s most cryptocurrency-oriented countries, as evidenced by the global crypto index adoption, ranks fourth overall in the world. According to Chainalysis’ report, the country has recorded the highest volume of peer-to-peer transactions in the world over the past year.
Since January, the Kenyan currency has depreciated by more than 6% against the dollar, and the African country has one of the highest rates of remittances from abroad. It is therefore quite evident that, as mentioned above, the two things together can only drive the use of cryptocurrencies.