Let me start by clarifying something.
It is very hard to get the exact statistics on cryptocurrency trading, especially in regard to country volumes. This is because blockchains — the shared ledgers on which cryptocurrency transactions are recorded — are designed not to provide location data.
In fact, they do not provide any personal identifying data of the users. Everything is done through pseudonymous addressing on the ledger. This, in fact, is one of the primary selling points of cryptocurrencies — affording users privacy.
It is, however, true that there are specialized tools, such as Chainalysis, that can help draw a rough map of global cryptocurrency activity.
The effectiveness of this kind of tools is, however, being hampered by counter tools such as mixers in the case of Bitcoin, which help to mask further the movement of value on the blockchain.
In addition, newer blockchains, in particular, Monero and ZCash are designed to provide ever less amount of transaction data. While the Bitcoin blockchain, for example, has addresses and amounts moved accessible for everyone to see, these two newer blockchains mask everything including public addresses and amounts involved.
Due to these factors, it is almost impossible to find comprehensive and detailed data on country trading volumes.
It is, however, possible to get indicators.
These can be gotten from centralized service providers within the crypto space such as exchanges. One great source of data about cryptocurrency transaction volumes that are linked to location users is peer-to-peer online marketplaces that connect buyers and sellers who reside in the same cities or countries.
While such platforms do not process the majority of transactions, they can provide insight trends. And since they let users make payment on the mode of fiat payment — traders can settle even by cash — they operate in the majority of countries around the globe.
Therefore the data collected is enough to paint a global picture. It is, however, important to point out that the most used platform for this purpose, localbitcoins.com, supports only Bitcoin, which is one out of over 1000 cryptocurrencies that people are trading around the globe.
However, there is a great positive correlation between Bitcoin and other cryptocurrencies. In particular, this is seen in price movement. But it also extends to interest by traders around the globe.
With that clarification out of the way, let’s look at how and why South Africa sees a lot of cryptocurrency volumes.
According to data by the statistics website Coin.dance, South Africa has for a long time had one of the highest bitcoin trading volumes. It has the second highest volumes on the continent after Nigeria.
Considering all the possible factors, it outperforms continental Europe.
Taking the first week of November as the base for analysis, a total of 152 bitcoins were transacted on localbitcoins in South Africa. In the same period, about 377 bitcoins were transacted on continental Europe.
At face value, it looks as though continental Europe outdid South Africa by slightly over double. But from a closer look at the numbers and the nature of the two markets then it is clear South African did way better.
In particular, South Africa outperformed Europe when you consider the population difference. There are about 56 million inhabitants in South Africa, compared to about 750 million in Europe. For every one South African, there are about 14 Europeans. The European economy is also several tens of times more than that of South Africa.
But why exactly is South Africa outbuying Europe?
The first possible reason is the high number of unbanked, especially in surrounding countries. A huge segment of the 1.7 billion unbaked population resides in the sub-Saharan African. Cryptocurrencies are coming in as an option and many are embracing them.
South Africa also has the best ICT infrastructure on the continent, which is ideal for supporting the use of cryptocurrencies. It has one of the fastest internet connections in Africa.
Meanwhile, the country is surrounded by neighbors struggling with a myriad of challenges; economic, social and political. In particular, Zimbabwe has become a classic example of what happens when the state fiat currency fails and as a result, has many times experienced higher crypto prices than the rest of the world.
Another reason South Africa is attracting a lot of cryptocurrency activity is that the regulators, in particular, the Financial Services Board (FSB) and the South African Reserve Bank (SARB) have been cautious with cryptocurrencies. They have not taken drastic measures that would stifle trading and this has instilled confidence in traders.
One other important factor that has led to South Africa has some of the highest cryptocurrency trading volumes is the fact that the country has been home to several exchanges. And this goes as far back as early 2013.
Some of the exchanges based in South Africa and with South African ownership include Luno and ICE³X.
It is several factors joined together that are driving the crypto volumes in South Africa.