African countries are becoming increasingly interested in cryptocurrencies. Some market speculators claim that it is a subversive development that will flourish on the continent.
Although Africa is rarely mentioned as one of the largest markets for cryptocurrencies, the continent is making waves in the fintech sector, recording many transactions in digital currencies.
Residents of Zimbabwe They are among the African countries that have recorded massive amounts of bitcoin transactions rather than their local currency, which is currently affected by hyperinflation. So far it seems that Nigeria, South Africa, Kenya and Ghana They host the fastest developing bitcoin customer networks on the continent.
Due to high transaction fees and levels of currency instability in Africa, many people on the continent are turning to cryptocurrencies for financial transactions and lower fees.
More than 55% of Africans plagued the cryptocurrency sector with massive amounts of transactions last year. Many Africans choose cryptocurrencies over real money as a medium of exchange.
Why Africa chooses cryptocurrency transactions
Reports from blockchain analytics firms indicate that many residents and businesses use digital currencies to escape high transaction fees, currency instability, and regulatory complications.
These small value transfers are probably P2P transactions rather than actual payments for services. But the recent rise of secure online casinos in Kenya accepting BTC payments may reveal a much darker reality. Most of those transactions could be transferred to the casino to avoid bank surveillance caused by fiat transfers.
More than 600,000 monthly transactions have been registered to travel to and from Africa. This year, transactions to and from Africa totaled up to $ 316 million in June, a jump of 55%. The continent's leading countries in cryptocurrency transfers are Nigeria, Kenya, South Africa, and Ghana.
Most of the small business owners in Nigeria, like the cell phone providers in Lagos, are starting to use bitcoin to pay their providers. And most local businesses are moving to cryptocurrencies for quick and convenient transactions.
Business owners included that payment strategies helped them to avoid high fees and they were a better option in contrast to the progressive purchase of expensive USD. Inflation in many African countries is very high, leading to high demand and the cost of buying USD. In the past decade, the currencies of several African countries have fallen dramatically against the USD, including the South African rand.
Other interviewees revealed to Reuters that bitcoin payments they also help people who have family members living abroad in countries like the US and UK to send cash home. Most Africans living abroad in countries like the UK and the US they use bitcoin to transfer money to your friends and family at home.
As a World Bank publication indicates, fiduciary fees for settlement in sub-Saharan Africa cost 8.9% all in all, with South Africa recording the highest expenses of up to 20% per exchange. While bitcoin fees are very low, typically below 3%. The estimate of digital currencies sent to Africa in 2020 is projected to exceed the previous year's total sent transactions of around $ 8 billion, with almost $ 1 billion shipped in June alone.
On the other hand, in 2019, the World Bank announced that only $ 48 billion in standard currency was sent to sub-Saharan Africa, and it is expected that drop to $ 37 billion this year. Many more investors in African countries are entering the world of cryptocurrencies, abandoning your local currency by a more discreet, faster and cheaper means of exchange. Local banks are trying to incorporate as many digital processes into their system as possible, to catch up with the ever-developing world of fintech.