As residents opt for digital currencies to avoid high rates and fiat currency instability in parts of the continent, cryptocurrency remittances are increasing in Africa
Cryptocurrency microtransactions increased by 55% in African countries last year. This occurs when Africans look for alternatives to unstable fiat currencies and the high fees they need to pay to make daily transactions.
Data analytics firm Chainalysis published a blog that focused on remittance of cryptocurrencies and the devaluation of fiat currency in Africa. According to the company, Africans are increasingly turning to digital currencies for their daily transactions on their local fiat currencies. Data published by the company show that more local individuals and companies in the region are sending and receiving funds through cryptocurrencies to avoid high fees, regulatory complications and fiat currency instability.
At the moment, Africa has the smallest crypto-economy in the world, with just $ 8 billion in cryptocurrencies traded in the region last year. However, despite the relatively small crypto-economy, Africans are beginning to use cryptocurrencies more as they struggle against economic instability, high rates and find new ways to save.
The continent saw a 55% jump in the total number of transfers below $ 10,000 in one year in June. The 55% increase brought the total microtransactions to $ 316 million. Nigeria – the continent’s largest economy – leads in terms of microtransactions, closely followed by South Africa and Kenya.
Adoption of cryptocurrency services on the rise in Africa
Ray Youssef, CEO and founder of the point-to-point (P2P) cryptocurrency exchange Paxful, told Chainalysis that Africans are starting to integrate cryptocurrency services into their businesses.
He stated that “Some of our users in Africa are even building their own shipping business on top of Paxful. A man I talked to who lives in South Africa but is originally from Nigeria, saw how difficult it was to send money back home and started a business where he took money from other Nigerian expatriates, converted it into Bitcoin and sent it to someone in Nigeria via Paxful, and make that person convert into naira and give it to the person’s family”.
Similar stories exist like this in various parts of Africa and it is starting to become the norm on the continent.
Abolaji Odunjo, a mobile phone retailer based in Lagos, told Reuters he is now using Bitcoin to pay his Chinese suppliers. He told the publication that Bitcoin has helped protect its business from the devaluation of the central bank’s currency and uses it for greater speed and convenience. Consequently, he managed to expand his business, thanks to Bitcoin’s resources.