Over the past few years, Africa has become a hotspot of the development of cryptocurrencies and it is not a surprising fact anymore. Statistics, trends, and analysis of industry experts point to the growing interest and use of Bitcoin and other cryptocurrencies. The idea of having anonymity and lack of surveillance, when making transactions is appealing for everyone and African citizens are also embracing this trend.
However, it should be said that while Africa is adopting crypto actively, they somewhat disregard blockchain. In this article, we will revolve around that topic.
The development of crypto in Africa
Over the years, platforms have emerged to address the problem of cross-border payments. Most companies stopped offering services to African countries, deeming the market “high-risk”, while those who stayed charged high commissions. And PayPal, for example, is not available in countries like Ghana.
The appearance of Bitcoin in 2009 opened up another opportunity for people on the continent to find a financial relationship. Initially, it was adopted by technology lovers and now has become more popular.
However, not everything went according to plan when crypto was first introduced in Africa. People associated cryptocurrencies with scams and the level of reliability was very low. However, after some time the situation was resolved.
As education has grown and more large companies have grown on the continent, cryptocurrencies have become increasingly popular.
How is crypto used now?
One of the most popular cases of the use of cryptocurrencies is cross-border transfers. As explained earlier, there are few effective platforms for sending and receiving money internationally. Moreover, existing methods are very expensive.
Furthermore, another very popular field that has rapidly developed in Africa, Forex trading, has also started accepting cryptos for trading. Most notably some of the best forex brokers in South Africa were the first ones that offered citizens crypto trading. Considering that cryptocurrency is very volatile some people use it to their advantage. Several local exchanges on the continent recorded large trading volumes, especially in 2020.
Cryptocurrencies such as Bitcoin solve payment problems by allowing Africans to send and receive money for pennies. Moreover, traditional methods have critical limitations that do not exist in cryptography.
Another important case of using cryptos is that they can act as a repository of values. Like most emerging markets, African currencies are likely to depreciate against the US dollar. To avoid losing value due to economic policies or different situations, some people on the continent keep their wealth in Bitcoin, which is beneficial. If we pick up an example of Zimbabwe where there is devastating inflation, cryptos are very helpful
Finally, cryptocurrencies provide Africans with a unique opportunity. The cryptocurrency ecosystem has created an online economy that allows people to make a living working in the crypto industry. African developers, writers, and designers work with major crypto brands.
Growing interest on the continent
In recent years, cryptocurrencies have become very popular on the continent. Very popular to such an extent that Africa leads in the search for the word “Bitcoin” in Google.
The presence of more crypto-platforms and ATMs on the continent than before is another sign of growth. However, some problems complicate the process of transition to mass implementation.
Why is blockchain disregarded?
Even though we have a massive surge in adopting cryptocurrency in Africa, blockchain is not fully accepted by the citizens of Africa and it is very surprising. Blockchain is used in various countries to store information and it is a very convenient wallet for funds too. However, in Africa, we see this tendency that people are not very “obsessed” to use this technology and are preferring using only cryptos.
The regulation and future of crypto in Africa
Most African countries have yet to adopt rules regarding cryptocurrencies. Countries such as South Africa and Kenya have begun this process. On the other hand, active countries such as Ghana and Nigeria do not have a clear understanding of the regulation of cryptocurrencies.
In the past, Ghana’s financial regulators have warned about investing in cryptocurrency. Similar sentiments are observed in Nigeria. However, a recent statement by the Nigerian Securities and Exchange Commission published that it intends to regulate the activities of enterprises working with cryptocurrencies, which indicates an improvement in the situation.
Despite negative regulatory sentiments, innovations are taking place in the crypto-space of Africa. It will be interesting to see how crypto in Africa will develop over the next years. But one thing is obvious – Africans should also take a look at blockchain technology which is for some reason neglected in this region. But still, it is a very young sector and there is a lot of room for future improvement.