Africa is one of the best-positioned regions to benefit from the global adoption of cryptocurrencies such as Bitcoin, Ethereum, and Solana in the coming decade. Africa’s young population 1.4 billion persons, about 17% of the global population, will be the fastest-growing region in the world over the next two decades.
Young Africans are more connected to the global economy than ever thanks to high-speed internet and computers. Africans have taken an interest in cryptocurrencies as a way to send and receive payments to friends and relatives globally without having to rely on centralized financial institutions.
African cryptocurrency usage grew by over 1,200% in terms of value received in 2021, according to a report by Chainalysis. Chainalysis estimates that African countries collectively received around $105.6 billion worth of cryptocurrency between July 2020 and June 2021. Kenya, Nigeria, South Africa, and Tanzania all ranked in Chainalysis’ top 20 Global Crypto Adoption Index.
Many Africans use cryptocurrency for international commercial transactions. African business owners use cryptocurrency to pay for goods to import and sell at home. “If you’re working with a partner in China to import goods to sell in Nigeria or Kenya, it can be hard to send enough fiat currency to China to complete your purchases,” said Artur Schaback, COO and cofounder of popular P2P exchange Paxful. “It’s often easier to just buy Bitcoin locally on a P2P exchange and then send it to your partner.”
Cenral African Republic Adopts Bitcoin as Legal Tender
Earlier this year the Central African Republic (CAR) approved Bitcoin as legal tender, following the move by El Salvador in 2021. CAR is one of the world’s least developed countries, but is rich in diamonds, gold and uranium.
“Businessmen will no longer have to walk around with suitcases of CFA francs that will have to be converted into dollars or any other currency to make purchases abroad,” economist Yann Daworo told BBC Afrique. Daworo believes the CFA was not being used “to benefit Africa”. There are growing calls in several countries for the currency to be dropped by those who see it as a relic of the colonial era, enabling France to continue to exercise economic control.
Ground-Up Movement
Bitcoin Magazine featured a prime example of how fiat currencies have been mismanaged by bureaucrats. The story discusses how an eighteen-year-old Senegalese man, Fodé Diop, had saved his money to travel to Europe and the United States. Sadly, his family suddenly lost half of its savings literally overnight when French and Senegalese officials met the night before and declared that the Senegalese coin, the CFA franc, would be worth half as many French francs as it had used to be.
Today, Fodé is working to increase the adoption of cryptocurrencies in Africa. Fodé realized that Senegal could adopt cryptocurrencies to solve the problem his family faced in the past. Cryptocurrencies could help stabilize long-term savings for the average Senegalese citizen. Cryptocurrency protocols such as Bitcoin, Etherum, and Solana are decentralized and cannot be adjusted or manipulated by a handful of decision makers.
“Never before did we have a system where money could be minted in a decentralized fashion…For the first time, we have a powerful tool to push back against oppression…we gotta use the tools we have today to fight for the people. Not wait around for someone to come help us,” said Fodé.
Easy International Payments
Getting paid in cryptocurrencies such as Bitcoin, Ethereum, and Solana enable sAfricans to save more. Most Africans own mobile phones, which they can use to access cryptocurrency markets. Avana Wallet, cryptocurrency wallet on the Solana blockchain, offers Africans non-custodial wallet solutions that do not require a financial institution intermediary. Africans can send and receive cryptocurrency to family, friends and businesses around the world with just a few clicks in a matter of seconds. Payment solutions such as Avana Wallet will help reduce the financial cost burden associated with legacy banking systems.
South Africa Is Embracing Crypto
South Africa, which boasts one of the most developed financial economies in Africa, has chosen to embrace cryptocurrencies. The country treats cryptocurrencies as an investment and a taxable vehicle, and it has led to widespread usage and trading among South Africans. During 2021, South Africa witnessed over crypto trades amounting to hundreds of millions of dollars every day.
South Africa’s biggest cryptocurrency exchange, Luno, expects formal regulations to be introduced in 2022. “We anticipate the introduction of a clear South African regulatory regime likely by the end of 2022. Regulatory certainty will have a host of positive spin-offs for the crypto sector,” said Marius Reitz, Luno’s general manager in Africa.