Africa’s crypto market grew more than 12-fold last year

By Raffaele Redi

Findings stressed that the continent has some of the highest grassroots crypto adoption in the world

bitcoin symbol in the middle of a map of Africa                                 
The African crypto market is seen as one of the most dynamic and exciting markets – Photo: Shutterstock
                                

Africa’s cryptocurrency market grew over 1,200% by value received in the past year, and the continent now represents the third fastest-growing crypto economy, as noted in a blog post by cryptocurrency data analyst firm Chainalysis. 

The post commented that although Africa has one of the smallest cryptocurrency economies of any region studied, as the continent received $105.6bn worth of cryptocurrencies between July 2020 and June 2021, its market has proven to be “one of the most dynamic and exciting”. 

The research findings stressed that the continent also has some of the highest grassroots crypto adoptions in the world, with Kenya, Nigeria, South Africa  and Tanzania all ranking in the top 20 nations for crypto adoption on Chainalysis’ Global Crypto Adoption Index.

Higher retail transactions 

The research also found that a larger share of Africa’s transaction volume is made up of large retail and small retail-sized payments than elsehwere in the world, as it stands at just over 7% compared to the global average of 5.5%.

“P2P [peer-to-peer] 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,” commented Chainalysis.

The blog post also noted that in 2019, Sub-Saharan Africa received at least $48bn worth of estimated remittances, about half of which went to Nigeria, according to a Brookings Institute study. Blockchain data analysis confirms that cryptocurrency-based remittance payments are increasing in Africa.

International commercial transactions are also more convenient with crypto, which is a significant factor in its growing popularity across the continent. 

Peer-to-peer preference

Cross-regional transfers also make up a bigger share of Africa’s cryptocurrency market than in other areas – a whopping 96% of all transactions, compared to a total of 78% for all other regions.

Citizens frequently trade via P2P platforms in countries such as Nigeria and Kenya, where it is difficult to send money to cryptocurrency businesses from bank accounts.

Some citizens have been also reported using social networks as a trading platform. This causes uncertainty about the figures for the rate of P2P activity in Africa, as these could be even greater than currently seen in the data.  

Finally, a survey on central bank digital currencies (CBDCs) such as the Nigerian e-naira showed that fiat currencies’ instability could threaten progress in the development of CBDCs by African central banks, and undermine confidence in these. 

This lack of confidence appears to be leading more and more Africans to turn to cryptos as a back-up, specifically to preserve their savings in the midst of harsh and uncertain economic conditions.  

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