Evolution Of Cryptocurrency In Africa
The use of cryptocurrency in African countries has recently increased dramatically. This is after many Africans realized the true value of cryptocurrency and its benefits.
According to a report by Arcane research, a channel that deals with digital asset research and analysis, African countries are among the top countries in terms of Bitcoin adoption. South Africa, Nigeria, Kenya, Uganda, and Ghana are among the top African countries.
Furthermore, according to this report, Africa is one of the most promising continents for cryptocurrency adoption. This is because it’s a potential market where cryptocurrency has yet to take shape.
Furthermore, according to this Arcane report, most African countries share some similarities.
Among these parallels are the scarcity of banking infrastructure and capital control issues.
Aside from Bitcoin, other cryptocurrencies with high adoption rates in Africa include Ethereum, Lisk, and Dash. Zimbabwe, South Africa, Kenya, and Nigeria are among the countries where these currencies are widely used.
In other words, African countries have a long way to go in terms of cryptocurrency adoption.
The popularity of Cryptos in Africa
Mobile money has been a remarkable revolution in Africa. Because of its superior technology, this revolution has saved time for both merchants and customers.
For crypto companies to have a firm grip on the African crypto market, they must increase the rate of crypto investment. In fact, Twitter CEO Jack Dorcey has expressed interest in investing in the African crypto market.
Some countries have actively been positioning themselves as good cryptocurrency hubs in recent years. Seychelles and South Africa are among these countries. These countries have already begun to develop regulatory frameworks to oversee and regulate crypto activities in their respective countries.
South Africa, for example, released a 30 recommendation paper in 2021 for regulating any crypto activity in the country. The policy papers ensure that these crypto organizations adhere to the Financial Action Task Force (FATF) standards.
According to a report by BBC, the number of businesses accepting Bitcoin and other cryptocurrencies has increased in Kenya. Despite the Central Bank of Kenya’s warning about the volatility of these cryptocurrencies.
According to the Blockchain Association of Kenya, the amount of Bitcoin traded in 2021 was worth more than $1.5 million. This number is expected to grow significantly as cryptocurrency adoption grows.
Nigeria is another country where cryptocurrency adoption is on the rise. Even better, platforms in Nigeria facilitate the sale and purchase of cryptocurrency in local currency.
Because of the growing popularity of cryptocurrency in Africa, most merchants now accept cryptocurrency payments. As adoption grows, it is almost certain that crypto payments will become the norm. However, you can still use your cryptocurrency to make payments using crypto debit cards such as the Club Swan card.
These debit cards will also become popular as cryptocurrency adoption spreads wisely.
How has Bitcoin Driven Crypto Adoption in Africa?
Since its inception in 2009, Bitcoin has grown to become the most popular cryptocurrency in the world.
Bitcoin’s popularity has influenced the acceptance of other cryptocurrencies in Africa.
Because Bitcoin remains the most popular and valuable cryptocurrency, developers have created readily available alternative currencies. There are currently over 6500 altcoins in the crypto market.
The main reason for the hesitation in crypto adoption in Africa and other parts of the world is its volatility. This is because no institution has control over the crypto mining process. The majority of crypto mining takes place on personal computers.
In another world, Bitcoin is a decentralized currency over which the central bank and regulators have little control. As a result, most African and global governments have outlawed cryptocurrency.
Despite these unfortunate events, the number of businesses accepting cryptocurrency as a payment method remains high. This includes well-known corporations such as Microsoft. This is one of the factors contributing to the explosive growth of cryptocurrency adoption in African countries.
These countries see digital assets as a way to increase their wealth. This currency provides a platform for good governance and development in Africa. These currencies can also help reduce the current corruption rate in African countries to some extent.
Throughout the years, numerous cryptocurrency-based operations have emerged in Africa. The Luno Exchange, based in South Africa, is one of these operations. Luno Exchange currently has over 1.5 million customers in over 40 countries.
BitPesa is another Kenyan crypto-related operation. BitPesa, launched in 2013, facilitates the transfer of virtual remittances between international and African countries. Since its inception, BitPesa has reported impressive trading volumes.
Because Bitcoin is still young and has a lot of potentials, crypto experts predict that similar operations will sprout in large numbers.
What are the challenges of cryptocurrency adoption in Africa?
Although there has been exponential growth in crypto adoption in Africa, some challenges have been facing it. One major problem is the lack of adequate infrastructure.
Only 20 Bitcoin nodes are available in Africa, out of 10,267. The figure for Ethereum is even lower. Furthermore, the majority of these nodes are located in South Africa.
This demonstrates Africa’s unequal distribution of crypto infrastructure.
Furthermore, the Bitcoin Mining Network is underdeveloped. Africa accounts for only 0.24 percent of the total number of BTC Lightning nodes in the world. And it only contributes 0.07 percent to network capacity. The majority of these contributions are from South Africa.
Another report by Coinshares, a pioneer in digital asset investing, revealed that bitcoin mining activity in Africa is virtually non-existent.
Another common issue in African countries is low internet penetration. Africa has a penetration rate of 39 percent, while the global average is 59 percent.
One of the most important requirements for crypto mining and investment is high-speed internet. So, for crypto adoption to take off in Africa, each country must have a good and improved internet connection.
Fortunately, some African countries have increased their internet penetration so far. Kenya has the highest internet penetration rate at 87.2 percent, while Libya has the lowest at 74.25 percent. Meanwhile, other countries, such as Egypt, continue to have a low internet penetration rate of 48%.
Fortunately, Internet Service Provider (ISP) companies such as telecom are working to improve and expand internet access in African countries. There is no doubt that as internet penetration improves, crypto adoption will increase exponentially.
The dominant mobile money system in countries like Kenya, may also be a barrier to cryptocurrency adoption in these countries. According to the Central Bank of Kenya, Kenyans have transacted billions of dollars through mobile money services such as M-pesa over the years.
As a result of this dominance, cryptocurrency adoption in Kenya and similar countries may struggle to reach the pinnacle of dominance.
The penetration of smartphones in Africa may also impede cryptocurrency adoption in Africa. The majority of Africans still use non-smartphones. As a result, these individuals cannot access cryptocurrency wallets or cryptocurrency-related websites.
Worse, the majority of Africans do not know about cryptocurrencies. This makes it difficult for crypto to penetrate even the most basic levels of African countries.
Another challenge is the African governments’ lack of stance on cryptocurrency. Furthermore, African regulators have yet to clarify their position on cryptocurrency.
Cryptocurrency adoption in Africa is increasing at a high rate. However, by tackling the above challenges,
there is no doubt that these adoptions will boom in the next few years.