Africa’s vast adoption of cryptocurrency, especially bitcoin, continuously headlines several crypto news websites. Africa has been one of the fastest-growing markets for adopting cryptocurrency over the past year.
Africa’s Growing Appetite for Crypto
To be specific, Africa’s crypto market has increased by $105.6 billion in the last year, according to a new report by analytics firm Chainalysis and blockchain research.
The analytics firm Chainalysis estimated that African nations collectively got $105.6 billion worth of crypto between June 2021 and July 2020. This is equal to a growth rate of over 1200% in terms of value received by Africa in the past year.
Using this data, Africa has the highest peer-to-peer payment platforms in terms of transaction capacity across all regions.
“No region uses P2P platforms at a higher rate than African cryptocurrency users, as they account for 1.2% of all African transaction volume and 2.6% of all volume for Bitcoin specifically,” the report partly read.
However, the Chainalysis report disclosed that Africa’s cryptocurrency market share is the most minor compared to other markets. Per WorldBank, Sub-Saharan Africa’s median GDP per capita is $1,483. Comparing this value to the European Union’s GDP, which is $33,927 per capita, Africa’s wealth output is 22 times lower.
Regardless of its small crypto economy, Africa “has some of the highest grassroots adoptions in the world, with Kenya, Nigeria, South Africa, and Tanzania all ranking in the top 20 of our Global Crypto Adoption Index “, as noted by Chainalysis. The numerical value to indicate Africa’s grassroots adoption, confirmed by Chainalysis, is above 7%, higher than 5.5%, the global average.
The report further stated,
“Drilling down further, Africa also sees a bigger share of its transaction volume made up of professional, large retail, and small retail-sized payments than the global average. These numbers are a big part of why many African countries rank high on our adoption index, as smaller transfer sizes suggest higher grassroots adoption amongst everyday users.”
Remittances in the Form of Cryptocurrency
“Cross-region transfers also make up a bigger share of Africa’s cryptocurrency market than any other region at 96% of all transaction volume, versus 78% for all regions combined”, Chainalysis said in their report.
From all the regions Chainalysis studied between July 2019 and June 2020, Africa’s cross-region value received topped. This means that more Africans get their remittances via crypto. Chainalysis also reported that the monthly growth of crypto payments below $1000 is a possible indication of an increase in crypto-based remittances to Africa. The research company considers the upper boundary of approximated remittances sent to the continent of $1000.
Besides, a study found that Sub-Saharan Africa got roughly $48 billion in remittances in 2019, and Nigeria received half of this amount, according to a study conducted by Brookings Institute. Additionally, World Bank remittance data indicates that Sub-Saharan Africa is the most expensive region to send money to. Therefore, cryptocurrencies, commonly bitcoins, have always been used to reduce the cost and speed of remittances.
Africans are accustomed to using phones for payments because of the widely used M-pesa. This is a small step to shift to a blockchain-based P2P. from a fiat-based P2P, which might increase the adoption rate of Bitcoin and other cryptocurrencies.
