Barring the political and socio-economic hurdles that digital assets face in Africa, crypto continues to grow in popularity. This assertion has once again been substantiated by a report of KuCoin, a major crypto exchange.
Johnny Lyu, the CEO of KuCoin told Cointelegraph that the “adoption of digital assets in Africa will continue to grow exponentially. African countries have the highest crypto adoption rate in the world, outperforming even the biggest regions such as the United States, Europe and Asia.”
According to the report, the average number of monthly transactions across African countries has shown a 1,386.7% increase from January 2021 to January 2022. However, the average amount per transaction has decreased.
“The adoption of this technology is taking place not only for large transfers but for small payments as well.”
The report indicates that the number of users has increased significantly, showing a 2,467.2% spike over the same period.
“The adoption of crypto technologies in Africa was preceded by the availability of the technology and the presence of several motivating factors. These include the desire of the population to react quickly to any changes in the exchange rate of national currencies in countries with high rates of inflation and devaluation.”
The report discloses that over 88.5% of cryptocurrency transactions made by Africans are cross-border transfers and they turn to cryptocurrencies due to low transaction fees:
“In many cases, users pay less than 0.01% of the overall amount of the transaction transferred in cryptocurrencies. This simultaneously solves several issues associated with crypto transaction restrictions that are in place in countries like Nigeria and Kenya. End-users of services can conduct transactions in a matter of milliseconds without fear of temporary freezes of transferred funds, as is often the case with conventional payment systems.
“The possibility of quickly transferring investments across assets mitigates the chance of savings depreciation. Not all countries are as inflationary as those of Sudan (260%) or Ethiopia (66%). Still, the desire to preserve the purchasing power, even under 6.4% inflation (Tunisia), is natural for those seeking to preserve the value of their savings.”
The report says more cryptocurrencies are used in Cape Town, Cairo, Lagos and Kenya.
“Cairo, Cape Town and Lagos can be considered the engines of the digitisation process in the region. Kenya is a separate area of focus in East Africa, with the number of cryptocurrency transactions in Nairobi — its capital — being 64% higher than in the rest of the region.
“With the proper legislative attention and acceptance of the need for such digital technologies by the authorities, crypto platforms could be an effective steppingstone for the overall growth of Africa’s GDP.”
Implications and projections
The unprecedented growth of crypto adoption in Africa, especially in the younger age group, can be attributed to a survival mechanism, especially among the younger folks.
Many young Africans have come to regard the crypto market as a means of achieving financial independence. This development brings to fore the resilient nature of Africans because, despite harsh regulations placed on crypto trading and investment in prominent African countries, people have devised means like P2P and others to trade.
Africans without access to banks and who live in politically unstable countries would always be attracted to cryptocurrency.
Financial freedom is usually the driver.
Growing technological awareness of the local population, with many young people exploring programming and internet technologies, will continue to increase the number of crypto users in Africa. Africa has a young, digitally native population that is accustomed to digital currencies.
We believe that cryptocurrency will be around for years. That Bitcoin users can send money to just about anywhere there is an internet connection for relatively small fees and with no third-party interference is an advantage that standard government-issued currencies cannot offer. The authorities sooner or later would have to embrace this financial revolution and incorporate it into the system.
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