Cryptocurrencies are becoming more and more popular. This trend is also being reinforced by the COVID-19 pandemic, which has driven central banks around the world to take unprecedented measures. In order to mitigate the consequences of the crisis on national economies, the guardians of the currency flooded the markets with liquidity – which increasingly fed inflation fears and highlighted the uncertainty of fiat currencies.
This has in turn created a positive market environment for crypto-currencies such as Bitcoin, which was further strengthened by legalization measures in many countries. Bitcoin & Co. are particularly popular on the African continent, according to a recent study by Arcane Research.
Crypto as a use case in Africa
The study, entitled “The State of Crypto in Africa” takes a closer look at the use and distribution of digital currencies. The analysis found that Africa is “one of the most promising regions for the introduction of crypto currencies”, which they attributed in particular to a unique combination of economic and demographic trends.
Many African countries are struggling with high inflation rates and volatile currencies, at the same time there are problems such as capital controls and a lack of banking infrastructure. These factors have helped create an ideal breeding ground for currency alternatives in Africa, the authors of the study added.
However, the population does not seem to focus on a possible price increase of crypto-currencies, which distinguishes the region from many other parts of the world: “While elsewhere the focus has been on investment, speculation and trade, Africa, more than any other continent, has a need for the use of cryptocurrencies”. They are the ideal antidote to the existing challenges.
Remittances remain an important source of income
Many Africans get money from abroad. According to the World Bank, expats sent 48 billion US dollars to sub-Saharan Africa last year. But traditional money transfer services sometimes charge high fees, and the money is not available in real time. This also applies to domestic transfers, where high costs and slow speed are the main problems. Bitcoin platforms solve these problems: With the help of P2P Bitcoin platforms, money can be moved from A to B much faster and more cheaply. Against this background, the study concludes that “there is no doubt that Africa is well suited for the rapid introduction of crypto-currencies.”
Africa as the leading Bitcoin crypto continent?
Ray Youssef, the CEO of Paxful, one of these P2P platforms, also sees the African continent on the way to becoming the crypto-continent. “Africa currently leads the world in trade volume. Over the next five years, Africa will become the leading Bitcoin crypto-continent with its enormous growth in trading volume. It will grow in ways that no one can imagine. In addition, a huge explosion has been seen with the deployment of COVID-19,” the manager said in a podcast.
He also noted that much of the African interest came from Millennials. African millennials could be attracted to Bitcoin because it is both a hedge against inflation and has an overly large potential for dollar-based returns.
(Featured Image by Geralt via Pixabay)
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