Crypto usage in Sub-Saharan Africa is becoming mainstream rather than speculation, according to a report by blockchain analytic firm Chainalysis.
The report dubbed “How Cryptocurrency Meets Residents’ Economic Needs in Sub-Saharan Africa,” disclosed that the number of small retail transfers has surged, despite the bear market occurring in May. On the other hand, transfers of different sizes have dropped.
Per the study:
“If many of the people carrying out small retail transactions are trading cryptocurrency out of economic necessity — especially in countries where the values of local fiat currencies are dropping, as we’ve seen in Nigeria and Kenya, for example — then those people may be more willing to continue trading despite price drops.”
The report pointed out that many young people in the region were taking the cryptocurrency route to build and preserve wealth despite low economic opportunities.
Based on an interview with Chainalysis, Adedeji Owonibi, the founder of Nigeria-based blockchain consultancy Convexity, noted:
“We see a lot of daily traders who are trading to make ends meet.”
“We don’t have big, institutional-level traders in Sub-Saharan Africa. The people driving the market here are retail. Nigeria has a ton of highly educated young graduates with high unemployment rates, no jobs available — crypto to them is a rescue. It’s a way to feed their family and solve their daily financial needs.”
Chainalysis found out that the uniqueness of Sub-Saharan Africa was pegged on the high usage of peer-to-peer (P2P) platforms and the retail market based on the transaction volume witnessed. Per the report:
“Retail transfers make up 95% of all transfers, and if we drill down to just small retail transfers under $1,000, the share becomes 80%, more than any other region.”
With P2P exchanges clocking 6% of the entire crypto transaction volume in Sub-Saharan Africa, they are a fundamental part of the ecosystem. This is double that of the Central & Southern Asia and Oceania region, which comes second.
Creativity played an instrumental role in enabling leading P2P platforms like Paxful set foot on African soil. For instance, connecting Chinese and Nigerian gamers with gift cards.
Ray Youssef, the Paxful CEO, added:
“We had to get Bitcoin into Africa, which was difficult because it’s so hard to get money out of Africa. We needed a clever hack to make that happen. That hack ended up being gift cards.That got Bitcoin into Nigeria, and then the rest of Western Africa.”
Meanwhile, crypto exchange Binance recently launched a crypto education tour in five French-speaking countries to propel blockchain adoption and financial accessibility, Blockchain.News reported.
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