Kucoin, one of the most popular crypto exchanges, has made a full report on how Africa is leading in the adoption of cryptocurrency.
The COVID-19 epidemic greatly influenced the use of digital currencies worldwide, according to a policy paper by the United Nations Conference on Trade and Development (UNCTAD). Even though cryptocurrencies are largely illegal, consumers in developing countries use them as financial assets and benefit from increasing levels of financial inclusion.
The 2019 worldwide pandemic clearly resulted in severe economic instability, a decline in the value of world currencies, and rising unemployment rates as a result of lockdowns. The introduction of cryptocurrency gave many people worldwide an opportunity to benefit from trading in the market or generating passive income. According to the 2022 global crypto adoption index, the top 20 from chainalysis, Nigeria, Morocco, and Kenya are the three African countries that rank among the top 20 users of cryptocurrencies and related services.
Crypto adoption opportunities in Africa
Africa has undoubtedly seen a rise in the use of cryptocurrencies due to its population. Reasons include education, awareness of cryptocurrencies and blockchain technology, and a desire to generate wealth.
Blockchain-based currencies provide a decentralised, peer-to-peer, cryptographically secure money transfer method. DeFi, NFTs, and GameFi, innovations in the blockchain sector that have further stoked interest and drawn in newbies, have helped to fasten the global adoption of digital assets, particularly in Africa.
Key Reasons Behind Africa’s Rapid Adoption of Cryptocurrency
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Poor Economy
The majority of the population’s physical and financial well-being was negatively affected by the COVID-19 pandemic. The layoffs had a negative impact on wages and savings in a developing economy like Africa. The majority of the workforce lacks access to formal employment alternatives.
From the middle of 2020, many young people started trading cryptocurrencies, which was going through a booming phase. Several unemployed people now have the chance to make money from home because of the cryptocurrency market’s growing trade volumes and decentralised finance services like staking and yield farming.
2. Low transfer fee across border
Due to the fast and affordable money transfer features of cryptocurrencies, immigrants can send money back to their native African nations. As a cheap and speedy method of international money transmission, cryptocurrencies have gained popularity more quickly than the legacy infrastructure provided by traditional banking and financial institutions.
3. Web 3.0
The Web 3.0 trend ushers in a massive change in how consumers engage with internet resources. The development and adoption of Dapps backed by blockchain might propel cryptocurrency further into the mainstream. As a result, crypto acceptance in Africa and worldwide markets is accelerating.
4. Innovations
Cryptocurrencies have gone a long way from being a convenient means to facilitate financial transactions between peers. DeFi, P2P, Move-to-Earn, NFTs, and the metaverse have all introduced new methods to put crypto assets to work and earn money from them in the last few years. Africa is a young and tech-savvy region eager to absorb new technology.
Use cases of cryptocurrency in Africa
- Web 3: The next most profitable way to utilise and earn from cryptocurrency in Africa is through web3.Many African-based Web3 developers and content producers have established successful careers in this industry. For the fact that they accept crypto payments, there is another extremely lucrative opportunity to make money from cryptocurrency services on the continent.
- Crypto trading: Crypto trading is the second most common application of cryptocurrencies across the African continent. Many youths interested in trading the marketplace spend time learning technical and fundamental analysis, expanding their expertise.
- DeFi: DeFi protocols and crypto exchanges provide several alluring wealth-generating opportunities in Africa.
- Mining: A number of users from Africa also participate in cryptocurrency mining. Users in Africa have access to mining as a practical and economical means of crypto income. According to kucoin, users in Nigeria have shown a significant amount of interest in KuCoin’s cloud mining services.
Even though there are numerous prospects for bitcoin adoption in Africa, many major difficulties are impeding the general acceptance of the asset class. Let’s look at some of the main challenges driving people away from cryptocurrency in Africa.
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Governmental disapproval
The main obstacle preventing people from accepting and using digital assets is the lack of governmental approval and laws on cryptocurrencies, much like the rest of the globe. For instance, the Central African Republic (CAR) said it would become the first country in Africa and the second in the world to accept Bitcoin as legal cash in April 2022. However, when the country declared a hold on this rule and postponed its intentions, the jubilation among crypto enthusiasts quickly subsided.
2. Low Internet speed
A strong internet connection is necessary for the Web 3.0 environment. Low network speeds and sporadic internet access prevent users of cryptocurrencies from taking advantage of numerous profitable cryptocurrency-earning possibilities.
Many crypto-savvy African consumers could trade the markets more quickly and participate in more games with a dependable internet connection.While many African countries and the world’s wealthy economies are migrating to 5G, the new mobile network may take longer to extend throughout the African market.
Suggested ways to increase Crypto adoption in Africa
- Countries need to develop and apply a regulatory framework.
- Better infrastructure is required to enable blockchain and cryptocurrency, starting with dependable internet access.
- Corporations, governments, and other entities, blockchain and cryptocurrency enterprises must make a concerted effort to encourage innovation and the adoption of the technology by citizens
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