Africa bets on cryptocurrencies: their massive adoption increases the market value by more than 1,200% in one year

Africa Cryptocurrencies Economy

If some countries in Central America, Africa and Southeast Asia have something in common, it is the instability of local currencies and difficult access to financial services. Some problems that cryptocurrencies respond to are by allowing anyone with a mobile phone to make quick and cheap money transfers. Tokenization of financial flows can stimulate the growth of real assets, as demonstrated by the African continent. With a digital asset market that has increased in value by more than 1,200% in the last year, Africa is positioned as the third fastest-growing cryptocurrency economy in the world.

The African continent is home to more than 1.3 billion people, making it the second most populous in the world, but only 43% of its inhabitants have a bank account. This inaccessibility to financial services is a direct consequence of colonialism, civil wars and the harshness of the terrain. Despite all this, Africa has managed to turn stumbling blocks into advantages, the perfect vector for the adoption of digital assets that anyone with a mobile phone can access, according to the latest Chainalysis report.

Africa leads the peer-to-peer (P2P) payment platforms in terms of transaction volume in all regions, with a total transfer volume of more than 7%, compared to the global average of 5.5%. Regarding transactions between regions, they represent 96% of the cryptocurrency market on the continent, due to the high price of sending money abroad.

Likewise, Africans have opted for this alternative way of moving funds to the detriment of cryptocurrency exchange platforms such as Binance, which has been banned and blocked in several countries around the world. South Africa, for example, announced in September that Binance was not authorized to operate in the country.

Africa cryptocurrencies adaptation

Nigeria, the first African country to launch a digital currency

Nigeria had planned to join the small group of countries that have created a central bank-backed digital currency (CBDC), but has had to push back its launch date.

The implementation of this digital currency, known as E-Naira, will be carried out in five stages and aims to improve management processes and economic growth, as well as increase the financial inclusion of citizens through the opening of bank accounts digital.

In February of this year, the Central Bank of Nigeria prohibited banks from carrying out any type of transaction with cryptocurrency, under the pretext that its use contributes to money laundering and the financing of terrorism. The idea was to stop the massive adoption of cryptocurrencies by the population, with 1 in 3 people immersed in this type of assets, but the result was the opposite: it only served to boost the use of these digital assets.

The E-Naira will act as legal tender and will have an interest-free asset status. A limit will be imposed on value-based and customer-based transactions.

With more than 200 million inhabitants, Nigeria is the third country in the world with the highest number of virtual currency users, only behind the United States and Russia, according to a Statista study.