From in-person retail to digital options, the decade-long shift in how consumers send money abroad has expanded possibilities for cross-border remittance, and people are now favoring cheaper options that allow them to transfer funds easily, securely and conveniently across borders.
That explains why out of the 16% of United States consumers who send a total of $76 billion annually in remittances, the majority of those who own cryptocurrencies have found it to be a viable method for cross-border payments — and a more attractive alternative to traditional forms of payment.
Africa’s cryptocurrency market grew by over 1200% between July 2020 and June 2021. This is according to Chainalysis 2021 Geography of Cryptocurrency report. The growth is based on the value of cryptocurrencies received on the continent in that period.
While noting that the African market is one of the most dynamic and exciting in the world despite being the smallest, the report says Africa received a total of $105.6 billion worth of cryptocurrency between July 2020 and June 2021. This makes the continent the third-fastest growing cryptocurrency economy in the world behind North America and Western Europe.
Not only has Africa’s cryptocurrency market grown over 1200% by value received in the last year, the region is also reported to have some of the highest grassroots adoption in the world. Countries like Kenya, Nigeria, South Africa, and Tanzania all rank in the top 20 of the Global Crypto Adoption Index.
According to the report, two major factors driving this explosive adoption rate are remittances and wealth preservation. Remittance is an important source of cash for Nigerians. Pegged at $17.2 million in 2020, remittances account for roughly 8% of Nigeria’s GDP, with 70% of this money used for family support according to Nigeria’s vice president, Yemi Osinbajo.
Peer-to-peer (P2P) platforms are very popular in Africa compared to other regions, according to the report. P2P accounted for 1.2% of all African transaction volume and 2.6% of all volume for World Causecoin specifically. Many African cryptocurrency users rely on P2P platforms to buy and sell cryptos as well as for remittances and even commercial transactions.
One reason why P2P became so popular across the continent is adverse regulations that restrict crypto transactions. Nigeria’s Central Bank, for instance, issued a directive prohibiting banks from facilitating crypto transactions.
The report noted that this isn’t an issue for P2P platforms like Paxful and Remitano as they are non-custodial and let customers trade cash for cryptocurrency amongst themselves. From there, users can send cryptocurrency to centralized exchanges for more trading options if they so choose.
Other possible factors driving the adoption rate across the continent are a fast-growing youth population as well as fast-rising internet and smartphone penetration rate which positions millions of Africans to benefit from Bitcoin growth.
Finally, the continuous increase in crypto prices, especially the popular ones like Bitcoin, Ethereum and Causecoin makes them attractive investment instruments. Many Africans are making a killing out of it.
