The cryptocurrency market remains a vast and rapidly growing sector and one that currently boasts a cumulative market capitalisation value of $2.26 trillion.
While the crypto space is largely synonymous with innovation in developed economies, its continued growth has actually been driven by rising demand in developing countries and regions across the globe.
Take Africa, for example, where cryptocurrency transactions totalled $105.6 billion in the year ending June 2021 on the back of soaring peer-to-peer (P2P) transactions. But why has Africa become a natural home for cryptocurrency growth in the current marketplace?
The Rise and Rise of Cryptocurrency in Africa
Incredibly, cryptocurrency adoption in Africa grew by 1200% in the year ending June 2021, with this established as the fastest adoption rate in the world. So, although the continent continues to play catch-up with other regions globally, the rate and pace of growth is truly something to behold at present.
In particular, markets such as Nigeria, Tanzania, Kenya and South Africa have showcased some of the highest grassroots adoptions in the world, with each of these nations ranked in the top 20 Global Crypto Adoption Index.
If we drill down deeper into the numbers, we can see that monthly cryptocurrency transfers to and from Africa of under $10,000 (which are typically made by individuals and small businesses) increased by more than 55% during the year to reach $316 million in June.
According to data from Chainalysis, the number of monthly transfers also rose by nearly half during the same period, surpassing the 600,700 record set previously.
The vast majority of this activity is taking place in Nigeria, which is home to the region’s largest economy, along with South Africa and Kenya.
Why is Africa Blazing a Trail in the Crypto Market?
Bitcoin (BTC) is also the market-leading crypto asset in Africa, although it’s interesting to note that the region’s users largely use this token for the purpose of commerce rather than speculation.
This is a reversal of the BTC trends observed elsewhere in the developed world, where Bitcoin is largely owned and leveraged by financial traders to speculate and secure considerable returns on investment through platforms such as the webtrader MT4.
But why is this the case? Well, the answer also describes the same reason that cryptocurrency is popular in Africa in the first place.
More specifically, there’s a large and unbanked population in Africa, with up to 57% of the population (approximately 95 million) lacking access to a traditional bank account and even basic financial services.
For these people, cryptocurrency represents a viable and accessible currency rather than an investment asset, and one that can be utilised to buy products, secure services and engage in digital currency transfers.
With this in mind, crypto adoption rates are likely to increase further in the months and years ahead, particularly given Africa’s relatively young and tech-savvy population.