The world’s second-most populous continent faces new economic challenges as the African Development Bank projects that Africa’s real GDP will grow by 3.4% in 2021 after contracting by 2.1% last year.
Still, Crypto assets have seen accelerated adoption among a growing number of Africans as a result of the entrance of crypto giants sparking a revolution within the industry as a whole.
Some of its key markets, such as Kenya, Nigeria, Togo, and Ghana, are among the top crypto adopters according to Chainalysis global crypto adoption index data, primarily due to their high volumes of peer-to-peer (P2P) transactions when adjusted for PPP and internet penetration.
Artur Schaback, the COO and co-founder of Paxful a leading Bitcoin peer to peer trading platform, also credited the company’s grip as regard Bitcoin P2P trading via long term investments and physical presence thereby printing it with about 2.5 million African users with over $2 billion in transactions since its inception, improving productivity and remittance efficiency amongst Africans.
The largest market for Paxful, is Nigeria, with 1.5 million users and a volume of over $1.5 billion to date (since 2015).
Currency devaluations are common in fast-growing economies, causing residents to buy crypto assets on P2P platforms in order to preserve their savings.
Crypto assets are also used in these areas for international transactions, such as remittances, or commercial transactions such as purchasing goods for import and export.
Shay Datika, the founder and president of INX Digital assets, which offers one of the first security tokens that are registered with the Securities and Exchange Commission, discusses the role that crypto will play in Africa, especially its financial system.
“While the digital currency was created and thrived in some of the world’s richest economies, I believe it can take African economies to the next level after decades of struggling with traditional banking systems (if they exist at all). “
Louis Schoeman, Senior Analyst with SAShares.co.za says efforts are now being directed towards forcefully integrating technology into banks and they do not have the advantage of being first to do so.
The national currency of most African countries can only be transferred outside the country in limited amounts. African residents can circumvent these limits by using cryptocurrency to meet their financial needs,
“For the African economy, decentralized tokens and trading are attractive for several reasons: independence from incumbent banks, fast transfers, low fees, and the ability to access otherwise inaccessible virtual entities.”
“INX specifically ticks another major box: safety and regulation, guaranteeing that financially stressed individuals will not lose their money in get-rich-quick crypto schemes. And on top of that, access to financial products to invest, which was not accessible for them until now. “Shay Datika added.
Taking advantage of the cryptocurrency boom is a good move for Africa. Several African countries encounter high levels of unemployment as a result of the rapidly growing number of young professionals and aspiring entrepreneurs on the continent.
Changpeng Zhao, the CEO, and co-founder of Binance emphasized the role the world’s biggest crypto exchange by trading volume plays in terms of educating and empowering the world’s second-largest continent, after Asia.
Our focus has been to increase crypto awareness across the continent since 2020, equipping the masses with the skills and knowledge they need to safely navigate the blockchain world.
“Through Binance Academy and Masterclass, we’ve done this. Over 400,000 Africans have been provided with free blockchain education through the latter initiative since 2020. This is an amazing achievement! By implementing education initiatives in Africa, as well as expanding our ecosystem offerings, we are enabling more people to access crypto.”
Africa’s most popular sports game, football is also leveraging with Crypto as African football supporters are fast becoming familiar with fan tokens, which allow them to vote on a variety of minor decisions regarding their clubs.
Arsenal and AC Milan, two of the top football clubs in Europe, have launched tokens this year.
Head of Crypto Chiliz, a global sport-based blockchain company, Joe Grech testified about its functionality on the shore of Africa;
“Using Socios, active and passive fans can reach out to each other. When audiences don’t live near the stadium or in the country, clubs struggle to keep them engaged.
“Fan Tokens have given African football fans the chance to get behind their favourite teams, feeling more engaged with the club than ever before.”
FTX Founder and CEO Sam Bankman-Fried, talked about how he is working on growing his company in Africa – his company recently raised $900 million, giving it a market valuation of $18 billion;
“In Africa, one of FTX’s goals is to get its name out there; we believe we have the best product and user experience and are ready to share it with the world.
We are seeking ways to have a positive impact on the world through all of the initiatives, including through FTX foundation.”
“Our partnerships are no different, and we are working on a wide range of humanitarian projects.” Bankman-Fried added.
The African continent has the potential to become one of the biggest hotspots for cryptocurrencies, including both use and development. Government policy and the private sector’s involvement are the only hurdles.
DeFi start-ups are fast gaining traction in Africa, and it is either substantial legislation will be enacted to stop the progress of decentralized finance, or banks will become obsolete and semi redundant in the near future, according to Schoeman.
In Nigeria, plans to regulate the Crypto sector were put on hold until operators established bank accounts in Africa’s largest economy.
To being active in engaging with financial regulators, CZ mentioned that Binance continuously stays abreast of the ever-changing policies and regulations affecting the crypto industry. “Our concern is to protect consumers – that is why we need to find the best way to ensure a level playing field,” he said