How Cryptocurrency adoption in Africa surged 1,200 percent in 2020: Report

*This is no surprise as Kenya, Nigeria, South Africa and Tanzania all ranked in the Top 20 of 2021 Global Crypto Adoption Index, explains Chainalysis

Emmanuel Akosile | ConsumerConnect

Cryptocurrency adoption on the African continent has surged 1,200 percent over the last year, as people in some of the fastest-growing crypto economies favour digital coins to avoid bank and exchange restrictions, a Chainalysis report revealed this development Tuesday, September 14, 2021.

Users have opted for peer-to-peer platforms like Paxful and Remitano over exchanges.

Binance’s clients in Africa have opted for peer-to-peer platforms amid bans on the exchange.

With Africa’s digital-asset market that grew over 1,200 percent by value over in the last year, making it the third-fastest growing cryptocurrency economy in the world, users sought out cheaper and faster ways to transfer money at home and abroad,

This is no surprise as Kenya, Nigeria, South Africa, and Tanzania all ranked in the top 20 of the 2021 Global Crypto Adoption Index.

Chainalysis also said Africa also has 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%.

Peer-to-peer platforms (P2P), like Paxful and Remitano that do not have a central player like a bank or exchange, have become more popular than ever across Africa as a way of sending crypto, it noted.

Users have moved away from exchanges like Binance in favour of this alternative way of moving funds, Adedeji Owonibi, Founder and Chief Executive Officer (CEO) of a Nigerian blockchain consultancy company Convexity, told Chainalysis.

Binance has been banned and blocked in several countries around the world and South Africa issued a warning to the exchange in September and said it was not authorised to operate in the country.

Chainalysis wrote in blog post: “P2P platforms are especially popular in Africa compared to other regions, and many African cryptocurrency users rely on P2P platforms not just as an on-ramp into cryptocurrency, but also for remittances and even commercial transactions.”

Cross-region transfers make up 96 percent of Africa’s cryptocurrency market, but they only account for 78 percent of all other regions combined. People in Africa have been opting to send remittances using crypto because of the high cost of sending money abroad.

Chainalysis’s research also indicated crypto adoption is also correlated with instability in local currencies, such as the Nigerian Naira.

It said its data showed crypto trading volumes tend to increase when the Naira falls in value, which can fire up inflation.

On top of that, Nigerian banks don’t allow customers to send more than $500 out of the country at a time.

“If the government is strictly limiting the amount of money people can send abroad, they’ll get creative and turn to cryptocurrency,” Artur Schaback, COO and Cofounder of popular P2P exchange Paxful said.

He said his company’s platform saw 57% growth in Nigeria over the last year and 300% growth in Kenya.

“In many of these frontier markets, people can’t send money from their bank accounts to a centralised exchange, so they rely on P2P,” Schaback said.

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