Cryptocurrencies are being increasingly utilized in Africa, particularly over the last few years. It’s not uncommon to read that Africa could be the next frontier for cryptocurrency, as transactions using virtual currencies are exploding in African countries (despite cryptocurrency bans in some countries). So, why are cryptocurrencies so popular in Africa?
First, the way cryptocurrencies are used is widely understood in these countries, as the African population is already using mobile money more than in other parts of the world. The rise of mobile money has triggered a digital revolution, transforming classic banking infrastructure to virtual and untraditional banking infrastructures.
According to a McKinsey study, “two billion individuals and 200 million small businesses in emerging economies today [like in Africa] lack access to formal savings and credit.” As both mobile money and cryptocurrencies can be categorized as digital payments that support non-traditional financial structures, it is not surprising that the African population is quickly adopting cryptocurrencies. After all, these currencies can be used with any device with an Internet connection (which includes mobile phones).
Additionally, cryptocurrencies also represent a way for the population to fight inflationary pressures and monetary controls in their countries, often acting as a safe haven asset. In some African countries, such as Nigeria, Kenya, and South Africa, digital currencies are also used by retailers and small company owners in their day-to-day transactions.
Virtual currencies are also considered by some people as a great way to diversify their investments and take advantage of the high volatility of this new market, via derivative products like CFDs (Contract for Differences).
easyMarkets, for instance, is a regulated crypto CFD platform that offers a safe trading environment with great money and risk management tools for its traders. Among the most popular trading conditions and features offered by this CFD broker, crypto-traders particularly enjoy the fixed spreads and the guaranteed stop-loss, as they can better manage their positions and know in advance their trading costs.
Finally, the growing unemployment challenges in some African countries are causing young people to turn to new ways to earn money, innovating in activity sectors other than the traditional economic areas – the cryptocurrency world is attracting an increasing number of young African entrepreneurs!
Cryptocurrencies are also very useful for sending remittances across borders, especially given that transfers to and from Africa are so expensive. Cryptocurrencies are a solution to avoid high bank and currency conversion fees, as they offer a cheaper, faster, reliable, and more transparent way to send throughout Africa and across the world.
While it might be too early to say if cryptocurrencies will be widely adopted throughout Africa, many people and analysts believe that Africans are seriously looking into the crypto-sphere to be part of the crypto-revolution. Twitter’s CEO, Jack Dorsey, said several times that the future of Bitcoin (and cryptocurrencies in general) is in Africa. He wrote it in a tweet published in November 2019 after he spent some time in the continent – “Africa will define the future (especially the Bitcoin one)”.
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