More and more African countries see Bitcoin as a tool to combat rising inflation.
Africa and Bitcoin together against inflation
According to a recent report released in mid-June by Standard Bank, a major South African banking institution, between July 2020 and June 2021, cryptocurrency adoption on the continent increased by 1,200%.
In the ranking of the Global Crypto Adoption Index by the company Chainalysis, which precisely measures the degree of crypto adoption in different countries, the top ten places include three African states, Nigeria, Kenya, and Togo. South Africa and Tanzania, on the other hand, rank 16th and 20th, respectively.
The wide spread of Bitcoin and its “siblings” is undoubtedly related to both the very high inflation rates in almost the entire African continent and the dependence on foreign remittances. In addition, the African continent has the highest percentage of people without a bank account, and digital currencies make it possible to address this lack.
According to recent research by analytics firm Statista, Nigeria emerged as the most cryptocurrency-friendly country in the world, considering that about one-third of its inhabitants reported using or holding cryptocurrencies in their wallets.
On April 27, the Central African Republic, one of the world’s poorest countries, became the second state to adopt Bitcoin as legal tender, despite the IMF trying hard to oppose this decision. The state’s new cryptocurrency, Sango Coin, was also launched on July 4.
South Africa and cryptocurrencies
South Africa is integrating cryptocurrencies into its economy and community by building regulatory frameworks, developing CBDCs, and actively participating in blockchain technology. Trading and holding cryptocurrencies in South Africa is legal, as are cryptocurrency activities.
Also, Chainalysis found that between July 2020 and June 2021, Africans received $105.6 billion worth of cryptocurrency payments.
But the trend still seems to be on the rise in the new year as well. An April 2022 report by the Kucoin exchange estimates that from April 2021 to March 2022, cryptocurrency transactions on the African continent increased by 2.670%. According to the research, more than 88.5% of African cryptocurrency transactions are cross-border transfers. The reason is low fees. In many cases, users pay less than 0.01% of the total amount of the transaction transferred in cryptocurrency.
Johnny Lyu, CEO of KuCoin, states that:
“The adoption of digital assets in Africa will continue to grow exponentially. African countries have the highest rate of cryptocurrency adoption in the world, surpassing even larger regions such as the U.S. States, Europe, and Asia.”