Welcome bac to the Tribe! In this post we are going to discuss Africa and Crypto!
This electronic peer to peer payment system is becoming a popular form of e-payments in developed countries where now it may be used to pay household bills and increase investment portfolios.
Cryptocurrency traders can virtually send money anywhere in the world just with an internet connection with very little monitoring or regulation.
Crypto And Africa
Africa seems to be catching onto the crypto generation.
A survey conducted by UK based crypto company, Luno, suggested that almost 55% of Nigerians and 64% of people in Kenya avoid cryptocurrency because they do not understand the principle enough.
Generally speaking, in comparison to global trends, trading in cryptocurrency in Africa captures only 2% of the world’s total crypto market which implies that Africans are still new players in the market.
Despite this statistic, the top three cryptocurrencies traded in Africa are Bitcoin, Dash and Lisk which is an indication of a positive uptake. Interestingly enough, between July 2020 and June 2021, the use of cryptocurrency in Africa grew by a massive 1200% therefore making it the fastest acceptance rate in the world.
Most of the crypto trade in Africa goes through Binance which is the largest cryptocurrency exchange in the world. Despite the rapid increase, Africa still remains the smallest cryptocurrency economy in the world keeping in mind that the continent is the second most populous with around 1.3 billion people.
Why is this happening?
One of the main reason is because most African countries suffer from hyperinflation and the increase of the mobile money market has attracted the use of cryptocurrency. South Sudan experienced an inflation rate of 102% between 2016 and 2017 which could be unimaginable for some.
However, in the same breath, the African market has also become attractive to organized crime syndicates who use cryptocurrency to launder proceeds of illicit activities.
The leading crypto markets in Africa are Kenya, Nigeria, South Africa, and Tanzania. Furthermore, they have been ranked among the top 20 Global Crypto Adoption Index. In Kenya, many businesses have started to accept Bitcoin as a formal form of payment for services and products despite the banking Regulator warning businesses against this.
The current downturn in the African economic environment also nurtures a desire for Africans to seek an alternative payment system outside of the traditional banking system as many individuals cannot afford banking fees nor have access to formal financial services.
Another contributing factor to the exponential rise of cryptocurrency in Africa is the need for cross-border payments and remittances which is very costly for Africans. Therefore, cryptocurrency is a cheaper alternative and faster payment system especially for African expats. The remittance industry accounts for a major share of gross domestic product (GDP) in many African countries.
Does Africa’s fast adoption rate of cryptocurrencies equate to the generation of wealth for Africans and perhaps increased economic development?
Not necessarily because Africa still has a major infrastructure problem, unstable internet access and usage and frequent power cuts therefore affecting economic development.
Furthermore, Africa’s GDP per capita is still immensely lower than its peers in developed countries. Therefore, it affects African’s ability to trade in cryptocurrency for investment purposes. On the positive side, African crypto users are safeguarded from hyperinflation as cryptocurrency is not linked to inflation rates.
Though Bitcoin still dominates the global market, in Africa, there are a couple of emerging cryptos specifically created for the local market.
An example is Kobocoin which was created by Felix Onyemechi Ugoji, a Nigerian business man based in the UK. Kobocoin had branded itself as Africa’s eco-friendly mobile money rooted in African heritage.
It also assures its customers safety through 15 cryptographic hashing algorithms to secure the blockchain and transaction ledger. It also boasts that personal data is not stored on the Kobocoin blockchain with approximately a supply of 24,700,247.684453.
In addition, South Africa recently listed its own cryptocurrency called Safcoin in September 2021 . It was first created in 2018 by Neil, Tony and Michela Ferreira. The founders aim to accelerate Africa’s small -to medium businesses.
Naturally the likes of Kobocoin and Safcoin cannot compete with the mighty Bitcoin but African entrepreneurs and tech developers have embraced cryptocurrency positively.
It may not solve all of Africa’s economic problems but it does create a platform whereby in the long term, benefits linked to cryptocurrency may be realized.
With more awareness and education about cryptocurrency, the African market may start to capture some of the global cryptocurrency share. More and more Africans seem to be accepting the risks associated with cryptocurrencies in order to financially empower themselves.
Crypto And Africa Post
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