Crypto Adoption in Africa

Africa is among the fastest-growing crypto markets despite being the smallest. Let’s understand the current landscape in this continent, how Africans utilize decentralized currencies, and the challenges for further adoption.

The Current Landscape of Crypto in Africa

The 2023 Chainalysis Global Crypto Adoption Index paints an interesting picture of the countries using digital currencies the most globally. A key theme is the prominence of lower-middle-income countries from Asia and, of course, Africa.

Nigeria is ranked second in this index and is the African nation where crypto thrives most. Morocco is the next country found to have high crypto adoption in Africa, ranking 20th in the overall index.

Other African countries showing continuous support for decentralized finance based on data from Statista and BitPay include South Africa, Ghana, Egypt, and Kenya. Some, like the Central African Republic, have even adopted Bitcoin as legal tender, the first African state to do so.

It’s worth noting that while the likes of Egypt and Morocco demonstrate strong crypto adoption, digital currencies are technically illegal. This brings us to the other side of observing the usage in Africa.

While several nations have embraced cryptocurrencies, many have banned them. Data from Do4Africa shows that most of North Africa (Morocco, Libya, Egypt, Algeria) prohibits crypto. African states elsewhere that ban or restrict (with further data reference from the IMF) crypto include Zimbabwe, Sierra Leone, the Republic of the Congo, Cameroon, and Tanzania.

Bitcoin, Bitcoin Cash, Litecoin, Ethereum, and Tether are the most utilized digital currencies in crypto-friendly African regions.

How Africans Are Using Crypto

Several factors contribute to the rise of the African crypto embrace. These include economic insecurity, inflation, and the demand for fast, low-cost, cross-border transactions away from the traditional financial system. Then, many citizens are attracted to the speculative nature of digital currencies in the quest for wealth.

Let’s briefly explore the different use cases for decentralized currencies in the Mother Continent.

Cross-Border Transactions

A major appeal of using cryptocurrencies is the ease of sending money across international borders. While many African cross-border remittance platforms exist, they have higher fees and slower processing times than crypto.

The banking system is even more pricier and slower, not to mention its red tape. Furthermore, infrastructure for financial institutions is limited in numerous African states. All this makes it difficult for those in remote places to transfer funds to their homes in other African countries.

Digital currencies solve all these problems by being significantly faster, cheaper, and more accessible.

Shielding Against Devaluation and Economic Stability

African territories such as Nigeria and Ghana face currency devaluation. Stablecoins like Tether offer a way for citizens to save a portion of their funds or earnings using a stable-priced digital coin shielded away from their ever-fluctuating local fiat money. General economic uncertainty is another motivation to be pro-crypto, with several African nations experiencing annual inflation rates above the global average.

Users have increasingly mistrusted the conventional financial system. Bitcoin is often viewed as a hedge against inflation and a deflationary store of value. Hence, it’s common for Africans to save their cash in Bitcoin, or alternatively, Bitcoin Cash and Litecoin.

Trading and Investment

Linked to economic issues is the rise of African folk, particularly the youth, engaging in crypto for speculative trading or investment purposes. Crypto millionaires have become more common worldwide, offering everyone an accessible avenue for financial freedom.

Payments for Products and Services

Finally, Africans are progressively comfortable using crypto to pay for countless products and services through offline and online businesses. Enterprises have also added more digital currency options to their existing payment choices.

Challenges For Crypto Adoption in Africa

Despite the wonders of digital currencies, education, and awareness are among the challenges preventing widespread adoption in Africa. However, this issue is prevalent globally. Cryptocurrencies are more complex or technical for laypeople to understand than ordinary money.

This makes the average person vulnerable to numerous scams and other financial malpractices in crypto. Many countries ban digital currencies due to the difficulties of regulating these assets. Speaking of which, not enough proper regulatory bodies exist to supervise the crypto market.

Finally, internet access is another barrier. A lack of connectivity makes it difficult for people to learn about and benefit from crypto usage.

Looking to The Future

We’ve seen governments that were previously anti-crypto eventually begin accepting the invention. One emerging trend is central bank digital currencies. Although different from regular decentralized currencies, this is a potential change to anticipate in the future.

With Africa commanding a small portion of the global crypto market, substantial untapped potential exists. The future remains promising despite the current challenges. Crypto may be the answer for the African continent to promote financial inclusion and improve the economy.

DoshFX plans to be a major player in this regard, beginning with South Africa before expanding to other African nations.