Digital analytics firm Chainalysis reported that the cryptocurrency market in Africa has grown significantly over the past year, in addition to the region accounting for a larger share of overall retail transaction volume than the global average.
In a report released on Tuesday, Chainalysis stated that the crypto market in Africa increased in value by over 1,200% between July 2020 and June 2021, with high adoption in Kenya, South Africa, Nigeria and Tanzania. The company said the popularity of the P2P platform could be one of the driving factors for greater crypto adoption in the region, as some countries have restricted or restricted residents from sending money to exchanges via local banks. .
According to Chainalysis, the entire continent received $105.6 billion worth of crypto between July 2020 and June 2021. Nevertheless, it had a greater share of the overall transaction volume of the market made up of “retail-sized transfers” than any other region in the world – about 7% as opposed to the 5.5% global average. Furthermore, P2P platforms – including Paxful and LocalBitcoins – account for 1.2% of all crypto transactions in Africa.
“In many of these major markets, people cannot send money from their bank accounts to a centralized exchange, so they rely on P2P,” said Artur Schaback, co-founder and COO of Paxful. “Crypto products are becoming more user-friendly, so they can engage more people in the crypto economy and help them see that crypto is faster, cheaper, and more convenient.”
Other drivers for crypto adoption in the region could include remittances, which governments can receive by limiting the number of funds that people can send overseas. Many users in Africa can use crypto as a fast and cheap way to pay for international commercial transactions and stash their savings to avoid any potential fluctuations in the value of their fiat currency .
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Nigeria is planning to launch its central bank digital currency, eNaira, starting October 1. South Africa is also part of a joint initiative with Australia, Singapore and Malaysia to launch a fiat-pegged digital currency, but has yet to issue a potential one. Start date for testing of CBDC.