The Cryptocurrency ecosystem is going to become a major part of the Africa economy in this century. The potential it has to unlock the wealth of the continent is enormous. An African country is in the top 3 in the total trading volume in the world shows the interest the country’s youthful population has in cryptocurrency.
What is cryptocurrency?
Technology has brought about the “New Normal” to the way things are done worldwide. Technology is innovating the way we learn, how we communicate, and how we exchange money for goods and services. Cryptocurrency is one of the beauties of technology; it’s a digital currency or digital asset designed to work as a means of exchange. The technology that powers cryptocurrency is blockchain technology.
Why is cryptocurrency booming in Africa?
Many factors are responsible for the boom of cryptocurrency in Africa; some of these factors will be discussed extensively in this section.
- Easy cross-border payment: The world is gradually shifting towards a global employment system. The effect of covid now makes it easier for people to work remotely. This has given opportunities for multinational companies to hire talents from Africa. However, collecting money in Africa is a bit tedious. Most payment platforms don’t support payment to some countries in Africa, and the hectic verification process makes it easy to appeal to a wide range of people.
- Means of making money: The unemployment situation in Africa is one of the reasons for the growth of cryptocurrency. Cryptocurrency is very volatile; profit and loss are a possibility. Cryptocurrency trading is a means of making money for people. Apart from the trading aspect of cryptocurrencies, new career paths like Blockchain writers, Blockchain engineers, and Crypto analysts are opening up and employing people in the continent.
- Currency devaluation: The economics of most African countries is not stable. Inflation and political instability are some of the myriads of problems that are facing the continent. The country’s young citizens are resulting in cryptocurrency to level up with their counterparts in other countries.
Taking Nigeria as a case study, the Naira, the country’s official currency, was pegged at #1 to $180 in 2015 and is presently worth $500. This inflation means that the purchasing power of the citizens is reducing, and goods are becoming more expensive. As a result, the citizens have resulted in the use of cryptocurrencies to ameliorate inflation.
What does the future hold for cryptocurrency in Africa?
The future of cryptocurrency in Africa is looking promising. A lot of people are warming up to the opportunities in the industry. The advantages it has to help improve the continent’s economy are more than the risk involved in cryptocurrency.
Jack Dorsey, the CEO of Twitter and a crypto-enthusiast, is regularly using his platform to talk about the potential of cryptocurrency in Africa.
Many startups are coming out of Africa that are focused on strengthening the adoption of cryptocurrency in Africa.
Recently the government of Nigeria and Tanzania announced that they are working on releasing their digital currency.
Which countries are leading cryptocurrency economies in Africa?
The country leading the cryptocurrency economy in Africa is a bit ironic. The ironic part is that the Central Bank of Nigeria has placed a ban on cryptocurrency countries in Nigeria. One of the things that make cryptocurrency attractive to crypto enthusiasts is its decentralized nature.
During the protest against police brutality in Nigeria. The government placed a ban on the account that the youths of Nigeria were used to holding the protest. As a result, the youths resorted to using cryptocurrency to collect funds used to sustain the protest.
Nigerians cryptocurrency enthusiasts took advantage of peer-to-peer (P2P) trading to ensure that trading goes on despite the banks restricting payments. The other countries leading cryptocurrency trading are Ghana, South Africa, Zimbabwe, and Botswana.
Nigeria has the third trading volume of Bitcoin trading via P2P, only behind the USA and Russia.
The most traded cryptocurrency in Africa
Bitcoin is the most traded cryptocurrency in Africa. There are other cryptocurrencies like Ethereum, XRP, and Litecoin that are traded. The reason Bitcoin is number one is obvious as it’s the most profitable cryptocurrency in the world.
Challenges facing the cryptocurrency economy in Africa
One of the problems facing the cryptocurrency economy in Africa is that of regulation by the government. One can’t predict the extent to which the governments of countries that have placed a ban on cryptocurrency trading can go to enforce their decision.
Another issue is that of trust. A lot of people are still skeptical about how cryptocurrency works. Some people believe in the FIAT currencies that they can feel and touch. Despite the popularity of the digital asset in Africa, much education still needs to be done to adopt the cryptocurrency mainstream.
Final Note: More blockchain companies are expected to come out of Africa in the next few years. This will likely lead to a great adoption of cryptocurrency in the continent. Who knows if we get to see a cryptocurrency developed by African developers in the world’s top 5 most valuable cryptocurrencies.
Written By Adeyemi Boboye