With the emergence of P2P networks, the necessity to send money without going through banks, and savings in crypto to avoid inflation, the African market may have grown.
The African cryptocurrency sector has increased dramatically since last year, with a greater percentage of global retail transaction volume in Africa than normal, according to the digital analytics firm Chainalysis.
African cryptocurrency markets grew by 1,200 percent between July 2020 and June 2021, according to Chainalysis, which published a research on the matter on Tuesday. Some countries restrict or prohibit residents from sending money to exchanges through local banks, which could have contributed to wider acceptance of crypto in the region because of the prominence of P2P platforms, according to the business.
Chainalysis estimates that the entire continent will receive $105.6 billion in cryptocurrencies between July 2020 and June 2021. In spite of this, the region had a higher proportion of “retail-sized transfers” in the overall market transaction volume (approximately 7 percent) than any other region in the globe (as compared to the global average of 5.5 percent). A total of 1.2% of all crypto transactions in Africa are made using peer-to-peer systems like Paxful and LocalBitcoins.
“In many of these frontier markets, people can’t send money from their bank accounts to a centralized exchange, so they rely on P2P,” said Paxful co-founder and COO Artur Schaback. “Crypto products are getting more user friendly, so they can onboard more people into the crypto economy and help them see that crypto is faster, cheaper and more convenient.”
Remittances as a way to avoid government restrictions on the amount of money people may transfer overseas may be another driver of crypto adoption in the region. The value of their fiat currency may fluctuate, thus many Africans may utilize cryptocurrencies to pay for international business transactions more quickly and cheaply, and to store their savings.
The eNaira, a digital currency issued by Nigeria’s central bank, will be put to the test on October 1st. Additionally, South Africa is one of four partners working together to develop a fiat-pegged digital currency, but the start date for the CBDC trial is still pending.