Top African Countries Adopting Crypto in 2021

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Although crypto adoption has taken off in other parts of the world, Africa will seem to be a late mover into this space to several individuals. However, cryptocurrency has been in Africa for as long as the invention of Bitcoin, with several African countries having enormous trading volumes daily on the world stage.

Though cryptocurrencies are gradually being adopted in Africa, several African countries are against this revolution, pegging cryptocurrencies as either a fraud or a means by which terrorism acts and various crimes can be orchestrated.

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This article will discuss the African countries that have adopted cryptocurrency trading and the challenges cryptocurrencies face in these African countries.

How has the crypto market evolved so far?

Being the first Crypto introduced to the existence, Bitcoin, the digital currency created by Satoshi Nakamoto, has since risen to be recognized as a store of value worldwide, with it being nicknamed the digital gold.

With its unique technology (Bitcoin blockchain), this crypto has set in motion a revolutionary change in the way finances are handled. Through its decentralization ( not having a singular governing body), BTC has introduced DeFi, which acts as a solution to most obstacles faced by the traditional banking system. Together with other altcoins, BTC creates a means for fast transactions irrespective of the amount being sent and the distance between the sender and recipient.

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2021 meets Bitcoin amid a bull cycle, breaking past previous all-time highs and setting new all-time highs above the $60,000 mark. Information from previous bull cycles also indicates that this cycle is far from its end, with the bear cycle expected to be started late this year.
Though Bitcoin and other cryptocurrencies are experiencing major gains and are expected to have more, certain occurrences have led to a drastic fall in the market.
Although Bitcoin is currently amidst a struggle to regain its momentum due to;

  • China further stiffening the penalties to prevent the effects of Bitcoin mining. The trading and mining of Bitcoin in China have been a challenge, with the latter being more rampant due to the cheap cost of electricity in the country. Although cryptocurrencies (trading and mining) were banned in 2017, the Chinese government still tolerated these activities. However, due to the strain it places on the country’s resources, stiffer penalties are placed on mining activities, and institutions discovered to partake in cryptocurrencies. With these challenges stated above, the crypto market is filled with uncertainty as Bitcoin and several other altcoins struggle to get back to price marks initially attained. However, it is always important to have a plan that can either take profits or hodl through this period.

Rise of Bitcoin in Africa

Though taken off in several parts of the world, Crypto is still yet to be openly adopted in the African continent. Although this statement is a fact, Africa still holds one of the largest crypto trading volumes in the world, with Nigeria leading the charge.
However, a proper understanding of the role of cryptocurrencies in Africa requires a firm understanding of the benefits the crypto world provides Africans.

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Understanding the benefit of Crypto to Africa

Africa as a continent is significantly behind compared to the western world, with several shortcomings such as governance, resource management, traditional banking systems, poor channels through which individuals can earn passive income, unemployment, to name a few. These challenges are seen across several countries in this continent, and a need for alternative channels away from the traditional means of earning a living is required by most of the population.

Therefore, the concept of cryptocurrencies is well conceivable by the younger population and enlightened individuals, and these groups are seeing to make up a large percentage of the trading volume.
With the limited options available in terms of accessibility to cryptocurrencies by Africans, several of the individuals partaking in trading have their portfolios significantly limited because of the limited coin libraries offered by available exchanges in their environments.

Now that we have a summarized picture of the challenges facing this continent let us discuss a few ways the introduction of cryptocurrencies provides an escape to the citizens of this continent.

  • Intercontinental transactions: for funds to be successfully transferred from one country to another, financial institutions around the globe are required to have a mutual network. Therefore, for funds to be sent from Nigeria to the United States, a trail of banks having a connection to each other across neighboring countries is required. This can lead to delayed completion of transactions, exorbitant fees, and sometimes loss of funds. By utilizing cryptocurrencies as a medium of transfer, funds can be sent anywhere in the world for low fees, instantaneous transactions, and minimizing the funds’ exposure to multiple intermediaries.
  • Protection against inflation: Africa has several countries where their Fiats experience the detrimental effects of inflation and devaluation. Therefore, the introduction of cryptocurrencies creates means by which citizens protect the value of their funds by converting Fiats into digital currencies of various types, including stablecoins.
  • Alternative to the traditional banking system and centralization: in Africa, the banking system is heavily influenced by the government, and this has been depicted several times, especially in Nigeria during the #endsars protest where the government instructed the closing of accounts belonging to participants of the protest. In such a situation, the citizens switched to Bitcoin, which had no authority and therefore can not be shut down.
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The benefits provided by cryptocurrencies are numerous to state. However, the concept of cryptocurrencies is taking off in several countries in Africa and is expected to be well adopted in the future.

Challenges of crypto in Africa

As mentioned earlier, Africa is a late mover in the crypto space, and these are all attributed to several factors, some of which will be discussed in this article.

Regulation

Although a considerable number of individuals are aware of this opportunity and willing to adopt it, Africa has generally not been a great supporter of cryptocurrencies, and this is depicted by several African countries such as Nigeria who have placed restrictions or ban the trading of Crypto, terming it a channel for the sponsoring of fraud and terrorism and is, therefore, a risk to the citizens of the country.

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Reasons for the strive to impose regulations on cryptocurrencies in some countries in Africa are all just rumors, with suggestions such as; an action taking by a government to take power away from its citizens, a country fighting the devaluation of its Fiat currency, lack of understanding by the government to the opportunities posed by the adoption cryptocurrencies. However, the main reason behind the strive to regulate cryptocurrencies is not known.

Accessibility

Although any individual can easily access cryptocurrencies with as little as a smartphone, there are locations in Africa that do not have easy access to the internet, banking systems. Even when certain individuals are well knowledged about cryptocurrencies, the region in which they reside is also important because not all crypto exchanges might provide access to the region in question;

Awareness and information

These are the two main factors that affect the widespread adoption of cryptocurrencies in Africa, and this is due to the limited access to information that Africans have. When this information is available, the application becomes an issue as the appropriate channel or exchange available is either too expensive, not supported in the region, or has a limited coin library. Information is also affected in Africa due to the sheer number of individuals who do not know Crypto, which far outnumbers those with a firm understanding.

Awareness works hand in hand with information. Once an audience has an increased level of awareness concerning a topic, the more likely it is that they will gain more access to information and also make it available to prospective participants.

The lack of awareness in Africa is also influenced by regulation; with the governments clamping down on Crypto, most of the population lacking appropriate knowledge of cryptocurrencies are left to accept false information or concepts provided by the government or regulatory bodies.

Crypto adopting countries in Africa

Although cryptocurrencies seem to be fairly new in Africa, their utilization is widespread against so many regulations that the authorities of the respective countries might impose.
We will be discussing a few African countries that have adopted Crypto or have citizens that are actively partaking in the crypto market.

Nigeria

When discussing cryptocurrencies in Africa, one certain top player in this space will be Nigeria, and this can be attributed to several factors such as;

  • Centralized and poor banking system; Nigeria’s banking system is ridden with several flaws such as poor management, customer service, restrictions, and a tedious process of international transactions. Therefore, the utilization of cryptocurrencies reduces these shortcomings significantly.
  • Regulation: as earlier mentioned, the power exhibited by the government is great, and this was depicted in the 2020 #endsars protest, which saw the government issue a statement to banks instructing the cancellation of accounts dedicated to funds for the protest; this then saw a shift to the use of Bitcoin.

Although Nigeria is plagued with the above difficulties, it still boasts of having the region’s largest Bitcoin or crypto trading volume. The Nigerian crypto market is dominated mostly by peer-to-peer services, which translates to its high record daily trading volume.

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Current status of cryptocurrencies in Nigeria

Recent events have seen the Nigerian government strive to regulate crypto-related activities. This was first attempted in 2017 when a statement was released by the central bank of Nigeria cautioning against cryptocurrencies. However, the trading of digital assets was still tolerated. That was until early 2021, when a circular was released by the central bank of Nigeria instructing all commercial banks and financial institutions to close accounts belonging to crypto exchanges and individuals with a history of transactions of cryptocurrencies.

Events following this announcement were individuals scrabbling to take out their funds before having their accounts disabled. Local exchanges were also forced to halt activities, and most international exchanges were forced to limit the Nigerian Naira’s purchasing power and limit the depositing of Naira to just p2p channels.

The aftermath of this occurrence sees a minimal impact on the Nigerian crypto market as most individuals switched to p2p services such as Remitano, etc. Also, the Nigerian government released a statement saying that cryptocurrencies are not banned completely. However, the legality of cryptocurrencies in Nigeria is uncertain.

Kenya

Kenya takes second place in cryptocurrency daily trading volume next to Nigeria. Kenya is one of the African countries that is more welcoming to the concept of cryptocurrencies when compared to countries like Nigeria.

Data from the peer-to-peer exchange, LocalBitcoins, suggest an increase in the number of new customers signing up to trade Crypto by about 80% compared to the number of new signees in the previous year with the majority of the individuals involved in the market being tech-savvy young individuals.

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Also, the platform released data concerning the record trading volume in Kenya, which was achieved in January 2021 with an amount of 150 million Kenyan shillings being traded, which translates to about $1.4 million.

As earlier mentioned, the reasons for most individuals diversifying into cryptocurrencies are similar across most African countries. The Kenyan Shilling is reported to have lost about 45% of its value against the US dollar since 2008, and cryptocurrencies provide a means to protect against inflation and loss of value.

Current status of cryptocurrencies in Kenya

The Kenyan government has openly stated that it does not consider cryptocurrencies legal tender. However, unlike the Nigerian government, the Kenyan government has not banned cryptocurrencies but strives to regulate them.
Recent rumors have it that the central bank of Kenya has plans of making Bitcoin its reserve currency. Also, the top mobile payment platform in Kenya, M-Pesa, has adopted Bitcoin, allowing users to trade the Crypto using its platform.

Ghana

Ghana is one of the countries in Africa rich in resources and an economy fairly doing well. However, just like several other countries, Ghana too is subject to inflation. Therefore, it sees citizens search for a new and innovative way to maintain the value of their funds and invest.

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Current status of cryptocurrencies in Ghana

Currently, Ghana shares the same views of cryptocurrencies as Nigeria. However, it has not banned cryptocurrencies, and regulations have also not been set in place.
However, the central bank of Ghana has cautioned its citizens about the use of cryptocurrencies due to its lack of regulation and volatility.

Plans of the Ghanian government include regulating cryptocurrencies, which will be done through the regulation of individual exchanges operating in the country, which is expected to aid the adoption in Ghana.
An example of blockchain technology in Ghana is seen in real estate, where over 80% of landowners do not have the official deeds to their lands. Therefore, through blockchain technology, BitLand (a Ghanian startup) seeks to resolve this challenge.

Zimbabwe

Zimbabwe, a country that has experienced several economical challenges. However, despite
These challenges the government is not open to the concept of cryptocurrencies, which is depicted by the banning of cryptocurrencies.

Current status of cryptocurrencies in zimbabwe

The daily trading and users of cryptocurrencies in the country are still rising with reasons similar to those earlier stated. This is despite the ban placed on cryptocurrency trading.
Although the ban was placed, Golix, an exchange in Zimbabwe, is actively taking charge to fight the decision to ban cryptocurrencies.

However, the adoption of digital assets amidst the ban is still increasing. If the ban is eventually overturned through the actions of Golix, cryptocurrency in Zimbabwe is set for major adoption.

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