- Despite the fact that cryptocurrency has the potential to be a vital part of the future, many organizations and individuals remain hesitant to accept this new type of currency
- Over time, cryptocurrency usage and popularity have expanded in Africa
- Many Africans are interested in cryptocurrencies because they are thought to be more promising than traditional currencies
The use of cryptocurrencies in Africa has expanded over time. In terms of finance, cryptocurrency has helped Africans catch up with other countries on a continent with emerging states. Crypto is a competitive marketplace for everybody, and access is not restricted to a select few.
Crypto may be used to pay for products and services and exchanged into other currencies (liquidity). The most important aspect of cryptocurrency’s expansion and usage is that it is decentralized, which makes it difficult to trace and easy to handle. In truth, anybody can invest in cryptocurrency fast and simply using crypto copy trading or programmed cryptocurrency trading bots.
Rising acceptance rates in Africa are being pushed by a young populace that sees cryptocurrencies as a safer alternative to their over-inflated fiat currencies. For example, in Nigeria, Africa’s largest economy, one in every three persons has acknowledged using cryptocurrency.
Read: Nigeria weaponizes the eNaira against crypto adoption
Unfavourable Conditions for Crypto Growth in Africa
Despite the fact that cryptocurrency has the potential to be a vital part of the future, many organizations and individuals remain hesitant to accept this new type of currency.
Nowhere is this more evident than in Nigeria, where the central bank restricted financial institutions from facilitating cryptocurrency transactions last year, joining 23 other African nations that have either implied or outright restrictions on cryptocurrency transactions.
Cryptocurrency requires the kind of regulatory framework that will attract the attention of private-sector institutional investors in the long run.
Many Africans lack the technological knowledge to properly store and utilize cryptocurrencies in a regulatory quagmire of anxiety and ambiguity. The Nigerian government, for example, does this to discourage cryptocurrency adoption.
Frontrunner nations, on the other hand, like South Africa and Mauritius, have shown how a progressive attitude toward cryptocurrency may result in significant advantages.
The age disparity is also one of the primary reasons for the crypto backlash. Despite the fact that the continent is mostly populated by young people, the opposite is true for African leaders. In Nigeria, for example, the destiny of youthful crypto investors lies in the hands of President Muhammadu Buhari, a 79-year-old former army commander. Buhari has been suspicious of the preferences of Nigeria’s youth in the era of Tiktok and the Metaverse.
Read: Why Nigerians should be wary of Central Bank Digital Currencies
Another explanation for why crypto adoption is restricted in Africa is crypto-malware and scams. Scammers frequently promise customers big returns for investors but never follow their promises. This causes investors to struggle to get their funds back, discouraging others from investing in the cryptocurrency industry.
Undeterred Cryptocurrency Growth in Africa
Notwithstanding all of the challenges impeding the acceptability of cryptocurrency by individuals and government alike, one thing has remained constant. Over time, cryptocurrency usage and popularity have expanded in Africa.
This growth in cryptocurrency’s popularity is attributable to the numerous advantages, which include security and openness. Cryptocurrencies also have the power to transform several industries, such as real estate and finance.
In terms of money, For a continent with developing nations cryptocurrency has enabled Africans to catch up with other countries globally. Crypto is a fair playing field for everybody, and participation is not restricted to a select few.
Many Africans are interested in cryptocurrencies because they are thought to be more promising than traditional currencies. Many African countries have underdeveloped economies and high inflation rates.
Cryptocurrencies allow Africans to secure their money from depreciation. Bitcoin, for example, has increased in value by more than 1,000% since its inception in 2009. Despite the volatility of cryptocurrency, many individuals would rather save in it than their native money.
Cryptomania has swept the continent quicker than any place else on the planet, with transaction volumes increasing 1,200% between July 2020 and 2021. According to Chainalysis, Africa has the most users of P2P crypto trading platforms. The restriction on cryptocurrency in several countries has also contributed to this rise.
Remittances are also important in driving crypto usage in Africa. People in diasporas can use cryptocurrencies to transfer money back home and vice versa.
Crypto is also seen as a solution to escape the economic insecurity that plagues many African countries. Cryptocurrencies provide an alternative investment option that is not controlled by any government or organization.
There is no question that cryptocurrencies like Ethereum and Bitcoin are gaining significant interest in finance and technology in Africa. However, many people still doubt their authenticity as a form of cash and investment.
While some believe that cryptocurrencies represent the future of global commerce, others are wary of investing owing to a lack of regulation. It will be fascinating to observe how long it takes for cryptocurrencies to become widely accepted and popular investments.
Read: Cryptocurrency Taxation in Africa