CRYPTO IN AFRICA

My crypto journey started in the first quarter of 2018. During my time in this space I have seen a continent's apathy towards cryptocurrency shift so drastically in such a short period of time it is almost incomprehensible. I will like to discuss these changes and what prompted them in the first place. I will also explore some of the key benefits of crypto in Africa, highlighting the challenges the industry is currently facing and what I deem to be the future of this emerging technology in the growing economy of Africa.

According to reports by Chainanalysis, a crypto research firm, Africa accounted for $100.6 billion in on-chain transaction volume between July 2021 and June 2022. Although this represents just 2% of the global crypto transaction within that timeframe, it was a significant milestone for the continent, representing a 16% growth from the previous year. This increasing acceptance and use of cryptocurrency and blockchain technology in Africa can be attributed to the following:

THE INTERNET AND SMARTPHONE

The internet has played an important role in the development of the crypto industry in Africa. Many young Africans now have cheap and fast internet connections which have significantly increased access to information and globalisation by plugging Africa to the rest of the world. Now more Africans can learn and partake in the use of technologies once inaccessible to them.

In addition to having cheaper network services, more Africans have access to smartphones. According to Statista, there were 503.14million smartphone subscriptions in SUb-Saharan Africa in 2021 and it is expected to reach 79 million by 2027. It is safe to say that with the growing use of soft wallets like MetaMask, there is a potentially huge market for cryptocurrency in Africa.

THE GIG ECONOMY BOOM

The gig economy boom prompted by the 2020 pandemic and the prevailing unemployment rate on the continent nudged a lot of young Africans into this industry. The cheap and fast access to the internet made this transition seamless. However, the rise of the gig economy in Africa amplified a lingering problem in the African economy--cross-border payment, which prompted many gig workers to seek alternative financial solutions, hence the emergence of cryptocurrency in Africa.

FinTech has also grown significantly, with more local and foreign centralised exchanges to facilitate cross-border and micropayment. Also, there are an increased amount of peer-to-peer crypto transactions that have reduced the time and cost of transacting across borders by eliminating the middleman i.e banks and leading to more financial inclusion and autonomy.

NEW MARKET OPPORTUNITIES

Interest in cryptocurrency increased significantly since 2020, with the pandemic being a major catalyst. More young Africans were becoming more crypto-curious and with that came the discovery of more use cases (for crypto) and opportunities within the crypto industry, especially web3. At the peak of the bull market, many tech-savvy Africans landed jobs and artists sold their artwork across various chains. These were global opportunities many could not access prior to the crypto revolution in Africa.

Crypto adoption has continued to spread in Africa over the last 3 years, amidst a lingering bear market. To many, this is more than just a medium of exchange but a way of life which they have come to embrace completely.

FREE SPEECH AND POLITICS

Cryptocurrency and blockchain technology has played a huge political role in Africa, by protecting free speech and promoting political expression as was captured during the EndSarz protest. Young Nigerians were able to organise and voice their displeasure against police brutality amidst the threats of violence, debanking and media capture by the government.

Also, many Africans have opted for decentralised social media platforms like Hive with high censorship as their governments continue to crack down on free speech. Decentralised social platforms have also become a preferred alternative to mainstream media platforms that have become tools for propaganda by the government and corporations.

FINANCIAL SAFETY AND INCLUSION

Many Africans are choosing cryptocurrency over their depreciating currency to hedge against inflation that is ravaging the continent. Also, the issue of safety has been a major concern for many Africans with the increased cases of bank account hacks. Many are choosing self-custody over banking with commercial banks

In times of crisis, crypto has been a beacon of light for many African countries. The likes of Zimbabwe benefited from the crypto community during its financial crisis in 2017. Also during the pandemic crypto giants Binance donated palliatives to many African countries which helped cushion the effect of the lockdown. These are some of the ways cryptocurrency has benefited Africans over the years.

SOME CHALLENGES IMPEDING CRYPTO’S SPREAD IN AFRICA

REGULATIONS

Crypto regulation has been a hot topic globally. Africa has had its fair share of unfriendly crypto policies that have stalled the development of the industry. Many countries are indecisive about their position on crypto. There is also the occasional case of politicians using cryptocurrency to lobby for votes from the young populace only to change their stance once they assume power. Nevertheless, many crypto companies in Africa are finding ways to work within the parameters of the law.

DIGITAL LITERACY

The ability to use information and communication technologies to find, evaluate, create, and communicate information, requiring both cognitive and technical skills.

Although the cost and access to the Internet in Africa have seen significant improvement over the years, there is a lot of work needed to make this more accessible and affordable to many Africans, most of which are living below the poverty line. Internet penetration is yet to reach 100% in most African countries.

POOR REPRESENTATION OF AFRICA IN THE CRYPTO SPACE

As stated earlier, Africa contributes less than 5% to the entire trade volume in the crypto market. There is of course a high level of patronage from the African community in terms of numbers but their contribution in terms of developing and improving blockchain technology is almost unseen. Also, Africans have to deal with racism and the stereotypes associated with our continent, which is hardly talked about but is a prevailing factor impeding the collaboration between African communities and the rest of the world.

THE GET-RICH-QUICK MANIA

The get-rich-quick pandemic as described by The TechCabal is one of the prevailing problems in the crypto space. Many still see crypto as a get-rich scheme and will engage in degenerate activities that are counterproductive and dangerous to the industry. But due to the worsening economic situation on the continent, many still see this sort of play as a feasible way towards financial freedom.

THE WAY FORWARD FOR CRYPTO IN AFRICA

The solutions are as apparent as the problem. Crypto in Africa needs more structure and that entails building and strengthening our communities for better representation. This will bring about the development Africa needs to compete on a global scale.

There are also issues of infrastructural development and policy which are beyond the masses' jurisdiction, However, major stakeholders in the crypto sphere can lobby for favourable crypto laws that will aid the growth of the industry in Africa.

CONCLUSION

Crypto adoption will continue to spread across Africa. It is my hope that this spread will lead to massive infrastructural development that will allow more African developers to partake in the development of this technology and the continent.