Electronic transfers

African countries adopt crypto faster than their global counterparts

By Seth Onyango – Bird Newsroom

Africa amassed $ 105.6 billion worth of cryptocurrency in the forecast for the year ending June 2021, thanks to peer-to-peer (P2P) transactions in key growing markets.

Markets like Kenya, Nigeria, South Africa and Tanzania has had some of the highest local adoptions in the world and ranked in the top 20 on the Global Crypto Adoption Index.

The latest figures from digital analytics firm Chainalysis show that the transaction volume comprised of retail-sized transfers in Africa was 7%, compared to a global average of 5.5%.

“No region uses P2P platforms at a higher rate than African cryptocurrency users, as they account for 1.2% of all African transaction volumes and 2.6% of all Bitcoin volumes. in particular “, part of the report reads.

Trade volumes for several African currencies have particularly increased on LocalBitcoins and Paxful, the largest P2P platforms in the world by transaction volume since 2016.

Currently, P2P on these platforms has become entrenched in Nigeria and Kenya, where consumers use them to bypass strict financial regulations that restrict money transfers from banks to cryptocurrency companies.

Regulators in both countries have advised banks not to allow these transfers, but P2P platforms, which are not custodians, allow customers to exchange money for cryptocurrency with each other. Hence, users can send cryptocurrency to centralized exchanges for more trading options if they wish.

“P2P platforms are particularly popular in Africa compared to other regions, and many African cryptocurrency users rely on P2P platforms not only as a ramp for cryptocurrency, but also for remittances and even business transactions, ”Chainalysis said in the report.

“Interregional remittances also account for a larger share of the cryptocurrency market in Africa than any other region at 96% of all transaction volumes, compared to 78% for all regions combined. Below, we’ll explore the unique use cases and needs that are driving these trends in Africa.

Adedeji Owonibi, CEO and founder of a Nigerian blockchain consultancy firm Convexity and the first CBHUB Hub associated cryptocurrency community, told Chainalysis that Nigeria’s cryptocurrency economy has changed since the country’s central bank prohibits banks from facilitating cryptocurrency transactions.

“Binance was by far the most popular platform, but after the central bank sanction, many are turning to P2P platforms, like Paxful and Remitano,” he said.

Owonibi noted that a lot of P2P activities take place during informal group discussions on messaging apps rather than on conventional platforms.

“Informal P2P commerce is huge in Nigeria on Whatsapp and Telegram. I have seen young people and businessmen from these groups transacting millions with popular OTC merchants.

During this time, the growth of cryptocurrency in Africa comes as a number of countries on the continent seek to launch their own virtual currency, backed and issued by central banks.

Africa’s interest in digital currencies comes as the use of fiat cash declines in major African economies as consumers embrace electronic payment methods such as Lipa Na M-PESA, credit cards and gateways of payment.

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