Twitter and Square CEO, Jack Dorsey recently said “Africa will define the future (especially the Bitcoin one!)” But was he right?
Crypto in Africa on the Rise
Sad to be leaving the continent…for now. Africa will define the future (especially the bitcoin one!). Not sure where yet, but I’ll be living here for 3-6 months mid 2020. Grateful I was able to experience a small part. 🌍 pic.twitter.com/9VqgbhCXWd
— jack (@jack) November 27, 2019
Earlier this year, Luno published The State of Crypto in Africa report in collaboration with Arcane Research. This was an attempt to understand where the future for crypto in Africa is headed. In this summary, we’ll highlight some of the key aspects of the research, including the catalysts for crypto adoption in Africa, obstacles to be overcome, and the latest trends.
Crypto in Africa
Despite being an incredibly diverse continent, African nations often share key similarities, ranging from socio-economic issues to a significant lack of infrastructure. The use of cryptocurrencies around the world has, to date, largely centred on investment, speculation and trading. This is not true of Africa, where applications for crypto and the scope of challenges it could help overcome vary far more.
This makes it a fertile breeding ground for crypto. As the report notes that “Africa is one of, if not the most promising region for the adoption of cryptocurrencies. This is due to its unique combination of economic and demographic trends. While the overall adoption is relatively low, the potential is enormous, the growth is rapid, and the development is likely to become defining for the cryptocurrency industry going forward.”
However, there’s currently a polarity to crypto adoption in Africa. On the one hand, researchers have identified high ownership rates in certain countries. Google Trend data indicates Uganda, Nigeria, South Africa, Kenya and Ghana all rank in the top 10 on the topic of cryptocurrency, which demonstrates the growing interest therein. South Africa actually ranked third-highest worldwide at 13% with Nigeria ranking 5th (11%) in a survey about crypto ownership. In terms of crypto infrastructure, though, it’s lagging behind. There’s still a distinct lack of nodes, mining operations and supporting merchants. Of the 10,267 Bitcoin nodes worldwide, just 20 (0.2%) are located in Africa. Furthermore, research from CoinShares indicates there’s almost no meaningful Bitcoin mining activity across Africa.
Trading volumes across non-P2P (peer to peer) exchanges indicate there is generally less than $10 million in daily trading volume across African currency pairs. Luno contributes to the majority of this volume.
On the other hand, Africa accounts for a comparatively much larger share of the P2P trading market. Trading across Africa now accounts for more than 14% of LocalBitcoins’ and Paxful’s global weekly trading volumes, with activity focused in Nigeria, Kenya and South Africa. These volumes have seen a significant boost in 2020, surpassing $10 million in weekly volume across the two platforms.
Catalysts for adoption
Africa’s underdeveloped crypto infrastructure aside, there are a number of major catalysts that could be conducive to widespread adoption over the next decade.