Africa’s cryptocurrency market grew by over 1200pc between July 2020 and June 2021. This is according to the Chainalysis 2021 Geography of Cryptocurrency report. The growth is based on the value of cryptocurrencies received on the continent in that period.
The report says Africa received a total of $105.6 billion worth of cryptocurrency between July 2020 and June 2021 while noting that the African market is one of the most dynamic and exciting in the world despite being the smallest.
This makes Africa the third-fastest growing cryptocurrency economy in the world behind North America and Western Europe.
“Africa also boasts a bigger share of its overall transaction volume made up of retail-sized transfers than any other region at just over 7%, versus the global average of 5.5%,” the report states
Crypto traded on international exchanges like Binance, Paxful etc. were not included as the report focused on exchanges headquartered in Africa. As of June 2020, Chainalysis puts the total monthly crypto transactions on the continent at $316 million.
Africa is also reported to have some of the highest grassroots adoptions in the world. Countries like Kenya, Nigeria, South Africa, and Tanzania all rank in the top 20 of the Global Crypto Adoption Index.
According to the report, two major factors driving this explosive adoption rate are remittances and wealth preservation.
Another reason for the fast-growing adoption rate is wealth preservation and international transactions. Due to the continued decline in value of the Kenyan Shilling, for instance, many Nigerians are learning to preserve their wealth in the more stable cryptos, which, if anything is more likely to appreciate than depreciate in value.
Also, because of the unbearable Shilling to the Dollar exchange rate, Africans would rather transact in cryptos than in local currencies only to find out they no longer have sufficient funds to transact an international business due to a drop in the value of the currency.
“If you’re working with a partner in China to import goods to sell in Nigeria or Kenya, it can be hard to send enough fiat currency to China to complete your purchases. It’s often easier to just buy Bitcoins locally on a P2P exchange and then send it to your partner,” Paxful COO said.
Other possible factors driving the adoption rate across the continent are a fast-growing youth population as well as fast-rising internet and smartphone penetration rate which positions millions of Africans to benefit from Bitcoin growth.
Finally, the continuous increase in crypto prices, especially the popular ones like Bitcoin and Ethereum makes them attractive investment instruments. Many Africans are making a killing out of it.