Investors, big and small, novice and experts across the world, have fancied cryptocurrencies. But for Africa, it is a necessity. The average Joe’s across many countries have managed to rake in fortunes from their Bitcoin [BTC] and other crypto investment over the last decade.
The adoption seen in Africa reflects the need for a financial infrastructure to avoid the growing inflation. In developing countries, institutional investors are considered crucial in the crypto ecosystem. In contrast, the retailers and non-institutional traders of the world’s second-largest and second-most-populous continent are leading the crypto adoption. According to the latest report by data analytics company, Chainalysis, the crypto market in the region has expanded by more than 1,200% since 2020.
Why Africa ranks high on adoption index?
Countries such as Kenya, Nigeria, South Africa, and Tanzania have emerged as the highest grassroots adoption globally and now rank in Chainalysis’s top 20 Global Crypto Adoption Index. The entire continent is not only the 3rd-fastest growing crypto economy but also has a much larger share of its total transaction volume that consists of retail-sized transfers than any other region.
To put things into perspective, Africa’s retail-sized figures stand at 7% versus the global average of 5.5%. In addition to that, the region also sees a more significant share of its transaction volume comprising of large and small retail-sized payments than the global average.
As a result of these smaller transfer sizes, which indicates higher grassroots adoption amongst daily market participants, the countries above in the region dominate Chainalysis’ adoption index.
Peer-to-peer platforms are very popular in the continent compared to other parts of the world. The growth of P2P crypto exchanges has been steadily rising. As a matter of fact, Chaianlaysis observed that no other region uses P2P platforms at a higher rate than the crypto users based in Africa. They account for over 1% of all African transaction volume and 2.6% of BTC volume specifically.
This trend can be attributed to the fact that sending money to crypto businesses from customers’ bank accounts is tricky in countries such as Nigeria and Kenya. However, P2P platforms are non-custodial in nature, and hence, they enable customers to trade fiat for crypto amongst themselves.
According to Adedeji Owonibi, CEO and founder of a Nigerian blockchain consultancy company, Convexity, the stringent Nigerian law that barred banks from enabling crypto transactions has spurred a new trend.
“Binance used to be the most popular platform by far, but after the central bank’s sanction, many are moving to P2P platforms, like Paxful and Remitano. Informal P2P trading is huge in Nigeria on Whatsapp and Telegram. I’ve seen young people and businessmen in these groups carry out transactions for several millions with popular OTC merchants.”