- With 370 million Africans unbanked, financial inclusion is one of the most important areas where blockchain can make an instant influence.
- As per Chainalysis research, Africa acquired $105.6 billion in cryptocurrencies between June 2020 and June 2021, mostly through peer-to-peer (P2P) transactions in major growing countries.
- Blockchain has attracted the most attention because of its use in cryptocurrencies, but it is not the only way the blockchain may be innovative.
Value in innovation in Africa
With the present blockchain startup landscape thriving, Africa is quickly establishing itself as a crypto-tech powerhouse. Africa is now the world’s third fastest-growing cryptocurrency sector, drawing significant investment.
The growth of mobile technology across the continent has coincided with the broad use of mobile money services and, subsequently, cryptocurrencies, which provide access to a wide variety of economic infrastructures to those living in cash-based and informal economies.
With 370 million Africans unbanked, financial inclusion is one of the most important areas where blockchain can make an instant influence. P2P bitcoin marketplaces such as Paxful and Localbitcoins are now at the helm, enabling millions of people to have access to a variety of critical financial services.
With increased rates of mobile technology usage and a growing tech-savvy population, Africa is a great prospect for new technologies such as blockchain. With global financial market volatility, expensive remittance costs, and limited banking access, an increasing number of individuals are looking to alternative options such as cryptocurrency to handle their day-to-day financial concerns.
For example, the Kenyan mobile platform M-Pesa has effectively infiltrated the African market by fostering financial inclusion and enabling millions of people to use digital payment services. As per the Central Bank of Kenya (CBK), mobile money transactions in Kenya increased by 32% in 2021.
Furthermore, other successful cryptocurrency exchanges have developed in recent years, such as the pan-African exchange Yellow Card, which is presently operational in almost a dozen countries with hopes to grow in the future.Given the significance of agriculture all over the continent, it is not surprising that farmers have sought to integrate blockchain technology into the industry. One pioneering example is BeefLedger SA, which uses a blockchain-enabled provenance platform to authenticate and trace the origin of beef products in order to fight food safety and fraud problems in the South African market.
Mining companies have also taken use of blockchain’s potential to make the logistical process more accurate. Tracr, the world’s first blockchain network devoted to tracking the source and value of diamonds throughout the value chain, was introduced in 2018 by African diamond mining powerhouse De Beers, providing an accurate account of their origins.
African nations are ideally placed to benefit from the blockchain for a variety of reasons, the most important of which is a necessity. Many Africans cannot depend on massive, centralized, controlled infrastructure systems, which are typically filled with errors and red tape.
As a result, creativity is given a blank canvas to work with, and progressive advances appear to follow. T this has unwittingly produced the ideal climate for blockchain technology and cryptocurrency to grow since funding flows where innovation occurs.
Progressive adoption earmarks crypto growth in Africa
Between July 2020 and June 2021, crypto use in Africa increased by more than 1,200%. As per Chainalysis research, Africa acquired $105.6 billion in cryptocurrencies between June 2020 and June 2021, mostly through peer-to-peer (P2P) transactions in major growing countries.
According to Gartner, the economic value provided by blockchain will skyrocket, hitting $176 billion by 2025 and $3.1 trillion by 2030. According to the African Blockchain Report 2021,” blockchain firms across the continent raised $91 million in the first quarter of 2022, representing a phenomenal 1,668 per cent rise in cash flow over the previous quarter’s growth of 149%.
Throughout 2021, a total of $127 million was raised, accounting for 0.5 per cent of total worldwide blockchain fundraising. The majority of the venture money (96 per cent) went to South Africa, Nigeria, Seychelles, and Kenya. Fintech companies received $67 million (53 percent) of total blockchain financing, while exchanges received $34 million (26 per cent).
Rates of crypto adoption are strong in nations such as Kenya, South Africa, Tanzania, and Nigeria, where an absence of adequate financial services infrastructure has enhanced crypto ownership in addition to being a favored option for keeping and moving assets. The Central African Republic became the second country after El Salvador to make Bitcoin legal tender in April.
Blockchain offers more than just cryptocurrency
Cryptocurrencies were Africa’s first foray into the world of blockchain. Blockchain has attracted the most attention because of its use in cryptocurrencies, but it is not the only way the blockchain may be innovative.
It’s not just cryptocurrencies that can benefit from the blockchain’s capabilities. Companies that are discovering the full potential of blockchain are beginning to invest more money in scaling the technology in other sectors of the economy, such as financial services.
There are new opportunities for open, transparent, decentralized, and fraud-proof solutions because of the distributed ledger technology of the blockchain. In contrast, although cryptocurrencies are an easy sell for those seeking high-yield investments, blockchain technology has the potential to transform Africa’s digital economy.
The African digital economy is likely to be dominated by blockchain technology in the near future. In the near future, several African countries, including Nigeria, want to digitally transform their economies.
As of now, there have not been any cryptocurrency or blockchain unicorns on the continent, but that’s projected to change over the next two to three years. Interswitch (Nigeria) and Wave (Senegal) are two IT unicorns that have included blockchain in their operations, as well.
A significant portion of the new unicorns expected to emerge from the African continent is likely to be blockchain unicorns. Before the decade is over, Africa will be the world’s leading blockchain business.