Bitcoin is a virtual currency created in 2009—and has evolved to become one of the most widely used cryptocurrencies over the years.
In recent times, Africa has witnessed greater cryptocurrency adoption with massive increase in trading volumes which has driven the exponential growth for trading platforms.
Economic hardships such as high inflation rates and volatile local currencies, capital controls, and underdeveloped banking infrastructure has created a fertile ground for the rise in virtual currencies.
In light of the growing popularity of digital currencies, most African countries still haven’t adopted a positive regulatory framework to support crypto products.
Let us look at some of the leading countries in the adoption of cryptocurrencies.
Bitcoin Trading in Kenya
A number of Kenyan businesses are already accepting bitcoin payments despite several warnings issued by the Central Bank of Kenya in regard to the volatile nature of cryptocurrencies.
According to peer to peer bitcoin marketplace LocalBitcoins, Kenya is one of the three largest Bitcoin markets in Africa alongside Nigeria and South Africa.
Furthermore, the lockdowns forced more Kenyans out of formal employment and they turned to crypto trading and investing as they sought new income sources.
In 2020, LocalBitcoins saw more than 80 percent increase in sign-ups from the Kenyan market alone. In February 2021 alone, the number of active users rose to a high of 17,000 Kenyans transacting more than Ksh 100 Million on a weekly basis.
In the second week of January 2021, a record Ksh 150 Million was traded on local Bitcoins platform by Kenyans.
Mpesa was the most common payment method followed by Pesalink. A majority of the Kenyan users were below the age of 30 and most of them utilized Bitcoin for remittances purposes.
The number is expected to significantly increase as cryptocurrencies gain popularity in the country.
Bitcoin Trading in South Africa
Even South Africa is experiencing a surge in the adoption of cryptocurrencies with more than 37,000 new registered users on LocalBitcoins in 2020. During the period, more than $57 Million worth of Bitcoins was traded on the Local Bitcoins platform, a surge of 25% compared to the previous year.
Just like the other African countries, the surge in numbers was mainly driven by the high unemployment rate as they sought extra income sources.
Local Bitcoins says that in a survey conducted among South African users, a majority of them utilized Bitcoin for investing and trading for profit. A majority of the users were below the age of 34 and also used Bitcoin for remittance purposes.
About 65% of South Africans trade atleast once a month while 35% trade atleast once a week.
Bitcoin Trading in Nigeria
Nigerian is considered among the world’s leading countries in the adoption of cryptocurrencies despite the country’s central bank banning banks from engaging in crypto transactions.
The domestic currency in Nigeria has been very weak. The Naira holds little value and is influenced heavily by even the slightest economic change.
In the fourth quarter of 2020, Nigeria surpassed the US to become Local Bitcoin’s fifth largest market by trading volume.
Bitcoin Trading in Zimbabwe
Zimbabwe is a perfect example of a country has witnessed cryptocurrency adoption during an economic crisis.
Zimbabwe has the world’s second-highest inflation after Venezuela, according to figures from International Monetary Fund. In May 2020, Zimbabwe’s inflation rate stood at a staggering 785.55%, according to the Zimbabwe National Statistics Agency.
The high inflation figures are attributed to a decline in economic output and exports, corruption among many other factors that have piled up over the years.
Zimbabwe’s local currency has been losing value and the country has over the years adopted a multi-currency regime including South African (SA) rand (ZAR), Botswana pula and United States dollar (USD).
By adopting Bitcoin or another сryptocurrency as the primary money in their country, the citizens of Zimbabwe immediately have a currency that is not susceptible to local economic changes.
In the first quarter of 2021, there was an increase of 125% in the volumes of trades on LocalBitcoins by Zimbabweans.
What is the Outlook for Bitcoin Adoption in Africa Going Forward?
Still, cryptocurrency can revolutionize the way traditional currencies are used in most countries in Sub-Saharan Africa. For example, Bitcoin can provide a coherent single currency that is reliable and holds value to all who use it.
It also keeps costs transparent for users, and with enough usage, Bitcoin has the potential to become the primary currency in any third-world country.