Since the past year, Africa has been measuring up in crypto adoption. The latest report released by on-chain analytics firm, Chainalysis confirms this assertion. According to the report, the continent has witnessed a surge in the volume of crypto-related transactions between mid-2020 and June 2021. The report put the growth percentage at 12%.
The same report reveals significant crypto adoption in African nations. Among these nations, Nigeria seems to be the vanguard after an unprecedented surge in crypto transactions in the second quarter of the year.
Chainalysis’ report shows that the increase in Africa’s crypto transaction volume is attributable to the uptrend in peer-to-peer transactions, the decline in remittances received by local banks and the need to save in cryptocurrencies as a resort to evade the prevalent inflationary situation in some nations within the region.
Africa Facilitates Over $100 Billion Worth of Crypto Transactions
Africa’s cumulative volume dwarfs the average global volume, the report noted. Explaining in detail, Chainalysis estimated that Africa boasts over $100 billion in crypto transactions. The continent is said to have facilitated that huge volume between mid-2020 and Q3, 2021. Beating expectations, transactions executed by retail traders and investors exceed those performed by other retail traders globally- approximately 7% for Africa in contrast with 5.5% for other parts of the world where crypto adoption is becoming widespread.
P2P platforms in Africa have now proliferated leading to huge transaction volumes on their end as well. Since most local banks across the continent have deactivated direct transfers to crypto exchanges or platforms, several traders have shifted their attention to P2P transactions.
Meanwhile, P2P crypto businesses like Paxful and Localbitcoins accounted for 1.2% of all crypto transactions across the continent. On this basis, Paxful CEO, Artur Schaback revealed that given that people can no longer send money to exchanges, P2P is more like a last resort for them. Schaback added that the user-friendly nature of crypto products is spearheading adoption in the region.
Crypto Remittances Contribute to Transaction Volume
As already noted, the transition to crypto remittances has been a catalyst for the increasing volume. Several Africans now prefer remitting with Bitcoin and other cryptocurrencies due to the limits around transfers, especially from within Africa to overseas. Interestingly, this formed the basis of the crypto ban introduced in Nigeria earlier this year.
The apex bank- the Central Bank of Nigeria- in the country had alleged that foreign remittances into the country reduced owing to crypto alternatives. Thus, the ban was introduced. Unknown to authorities at the bank, this became a driver for further crypto adoption in the country, as people began to realize the benefits of digital currencies.
To fight the adoption rate, the CBN started making plans for a central bank digital currency just like the central banks in most nations. According to CBN, the e-Naira will be unveiled by October. It has already partnered with a foreign company named Bitt Inc. for the piloting of the e-Naira.