In recent years, the world of cryptocurrency has experienced immense growth and popularity all around the globe. In Africa especially, this innovative form of digital money is quickly becoming a viable option for many people looking to explore of its advantages.
From increased security to greater convenience in international payments, there are numerous reasons why cryptocurrency is gaining traction in African countries despite the fluctuation in the price of BTC and the unstable crypto market which we have witnessed this year.
The Impact of Crypto on Financial Inclusion in Africa
Small retail purchases drive remarkable crypto growth and usage in Sub-Saharan Africa, accounting for the world’s most significant proportion (80%) of cryptocurrency retail payments worth less than $1,000. According to research, peer-to-peer transactions are much more prevalent in Sub-Saharan Africa than everywhere else globally.
Africa’s peer-to-peer crypto transactions, which constitute about 6% of all crypto transactions, are much broader than those in Central and Southern Asia and Oceania, which account for the second-highest volumes in this segment.
Many Africans have embraced cryptocurrency in their daily lives. Remittances and commercial transactions in addition to retail transactions, have been significant drivers of Africa’s widespread adoption and usage rates.
The diverse crypto utilization and acceptance rates in Africa
A Research published about the Global Crypto Adoption Index, compares nations like Burkina Faso and Malawi to others in Africa like Nigeria and Kenya.
Burkina Faso and Malawi were ranked 133 and 137 out of 146 countries, whereas Nigeria and Kenya were ranked 11 and 19, respectively. This variety illustrates the range of crypto adoption and usage throughout Africa.
A genuine demand and potential for cryptocurrency
Further studies have compared wealthy European nations that use cryptocurrency to generate wealth with impoverished African countries that utilize cryptocurrency to maintain and build wealth in the face of adverse economic situations.
A Nigerian expert has stated that they don’t have significant institutional-level traders in Sub-Saharan Africa and that retailers dominate the market. Nigeria has a high population of highly qualified young graduates and a high unemployment rate with no suitable opportunities; crypto is a lifeline for them. It’s a means for them to support their families.
In Africa, retail, commercial, and peer-to-peer transaction-facilitating firms have a reasonable chance of success. According to published studies, the remittance user growth rate for a prominent peer-to-peer exchange is as significant as 140% in Kenya and 55% in Nigeria.
What challenges is the African cryptocurrency market facing?
The African cryptocurrency industry faces various obstacles, such as more access to adequate internet infrastructure, restricted access to banking services, and inadequate levels of financial awareness.
The regulatory framework in many African countries needs to be more transparent and precise regarding cryptocurrencies. This has resulted in a lack of confidence among potential investors and customers, impeding the market’s expansion. Furthermore, liquidity concerns exist since most exchanges need to be better connected with one another or global markets.
Finally, there needs to be more awareness regarding cryptocurrencies among the African people, to open up acceptance.
In conclusion, cryptocurrency is becoming more popular in Africa due to its potential for increased financial security and access to global markets. This is leading to an increase in investment opportunities and the development of new technologies.