According to digital analytics firm Chainalysis, the cryptocurrency market in Africa has grown significantly since last year, with the region accounting for a larger share of overall retail transaction volume than the global average.
According to a report published on September 14, Chainalysis, the value of Africa’s crypto market increased by more than 1,200 percent between July 2020 and June 2021, with high adoption in Kenya, South Africa, Nigeria, and Tanzania. The popularity of P2P platforms, according to the company, could have been one of the driving factors in greater crypto adoption in the region, given that some countries restrict or prohibit residents from sending money to exchanges through local banks.
According to Chainalysis, the entire continent received $105.6 billion in cryptocurrency between July 2020 and June 2021, but had a larger share of the overall market’s transaction volume made up of “retail-sized transfers” than any other region in the world — roughly 7 percent versus the global average of 5.5 percent. Furthermore, P2P platforms such as Paxful and LocalBitcoins account for 1.2 percent of all crypto transactions in Africa.
“In many of these frontier markets, people cannot send money from their bank accounts to a centralized exchange, so they rely on P2P,” said Artur Schaback, co-founder and COO of Paxful. “Crypto products are becoming more user friendly, allowing them to bring more people into the crypto economy and show them that crypto is faster, cheaper, and more convenient.”
Other factors driving crypto adoption in the region may include remittances as a way to circumvent government restrictions on the amount of money that can be sent abroad. Many crypto users in Africa may also be using crypto as a faster and less expensive way to pay for international commercial transactions, as well as HODLing their savings to avoid any potential fluctuations in the value of their fiat currency.
Nigeria intends to test its central bank’s digital currency, the eNaira, beginning Oct. 1. South Africa is also a partner in a joint initiative with Australia, Singapore, and Malaysia to launch a fiat-pegged digital currency, but no start date for the CBDC trial has been announced.