One of the main reasons investors across the globe are seeking to diversify traditional assets in Africa into cryptos is to counter rising fiat inflation
- Most traders in Africa are unaware of the many existing exchange platforms, and they usually use the most advertised or the most popular among those who referred them to crypto trading
- Crypto exchange platforms are seeing the potential in Africa, and they are racing against each other to gain popularity on the continent
The race to adopt cryptocurrencies is hitting new ceilings in Africa as their popularity increases, despite hostile policies from several governments in the continent.
Why Cryptocurrencies over traditional investments
One of the main reasons investors across the globe are seeking to diversify traditional assets in Africa into cryptos is to counter rising fiat inflation, with a majority of crypto investors and traders believing that crypto coins and tokens are safer and more secure than traditional investments such as gold, oil, stocks, liquid cash and real estate.
The roles that these cryptos and alternative coins play in society are not well defined, but they have a vivid description as each day passes as to which purposes they serve. The services they offer include:
The metaverse has created games that one can make money from through cryptocurrencies
- Investment tools
One can convert fiat currencies to cryptos and store them as value
- Loan Issuance.
Teachers of cryptos, crypto miners, traders etc.
- Cryptos are also a mode of payment to facilitate trade
- Transfer of remittances, among others.
The role that cryptocurrencies are playing in society is attracting a tanker of buzz from Crypto trading platforms. These crypto exchange platforms are seeing the potential in Africa, and they are racing against each other to gain popularity on the continent.
Crypto trading platforms racing to gain popularity in Africa
Over six hundred cryptocurrency exchange platforms invite investors to trade bitcoin, Cardano, Ethereum, Dogecoin and other digital assets in Africa.
A crypto exchange is a marketplace where you can buy and sell cryptocurrencies. The platforms have been using African artists to market themselves, and their adverts have often become recurrent on Africa’s social pages.
Among the most popular exchanges are:
Rated at 3.9 stars in the Google play store and over 50 million downloads, Binance is Africa’s and the world’s most used crypto exchange platform. It has a trust score of 10 in CoinGecko, with its trade volume ranging at about US$16.2 billion every 24 hours in April 2022, quadrupling the second most used exchange platform.
Binance has relatively lower trading and withdrawal fees, which increases its popularity among most first-time users. The exchange platform has over 80 cryptocurrencies available for trade, and transaction fees take about 0.1 per cent of investment.
Most traders in Africa are unaware of the many existing exchange platforms, and they usually use the most advertised or the most popular among those who referred them to crypto trading.
The P2P trading variable on Binance allows one to convert cryptos to almost all African currencies, attracting most Africans to the platform.
OKX has a trust score of 10 among crypto traders, with a trading volume of about US$3.1 billion in 24 hours in April 2022. The trading application has a 4.5-star rating, over 1 million downloads and more than 194,000 reviews.
With OKX, one can convert over 30 local currencies into BTC, ETH, USDT or other cryptocurrencies in minutes using a credit card or other payment methods.
For every four crypto holders in the world, one uses the “People’s Exchange” Kucoin. That is a milestone in a world with over 600 crypto exchange platforms.
Kucoin is rated at 4.4 stars, with over 5 million downloads and 83,000 reviews. It has a trust score of 10 with a 24-hour market cap of over US$2.13 million.
KuCoin provides access to a comprehensive library of over 630 altcoins at low fees. The characteristics of Kucoin that makes it a viable option in Africa:
- It has over 400 tradable cryptos with low fees.
- Can decrease trading fees by 20 per cent by paying with KuCoin’s proprietary KCS stable coin.
- Automated and margin-based trading available.
On April 15, 2022, Kucoin sold out 16,000 non-fungible tokens in one minute, promoting art and creativity in the world.
With more than 10m downloads and a 3.4-star rating, Crypto.com Exchange is another darling among crypto traders in Africa. The exchange platform hits a trust score of 10, a 24-hour trade volume of over US$2.19 million. Over 200 altcoins are available on the platform.
Many other platforms to trade cryptos on include Huobi Global, Coinbase, Kraken, WOO Network etc.
Since cryptocurrency platforms circumvent traditional banking services by introducing decentralized peer-to-peer lending services, they have the potential to level the playing field in the economy and expand finance options to underserved customer markets, among other things.
Cryptocurrencies are well-positioned to address a variety of economic challenges in the region, ranging from bridging financing gaps for the region’s micro, small, and medium-sized enterprise (MSME) sectors to streamlining the transfer of remittances.
According to Chainalysis, the continent has experienced a 1,200 per cent increase in cryptocurrencies from 2020 to 2021. Kenya, South Africa, and Nigeria rank in the top ten countries globally regarding cryptocurrencies use.
Cryptocurrencies in South Africa
Cryptocurrency trading has found a home in South Africa. President Cyril Ramaphosa’s administration announced in the 2022 budget that it is taking it with extreme seriousness. The government calls on regulatory bodies to establish ways to safeguard crypto owners in the country.
The government has taken initiatives proposed by the Intergovernmental Fintech Working Group, stipulating the following:
- Inclusion of cryptocurrencies asset service providers as accountable institutions within the Financial Intelligence Centre Act of 2001.
- Protecting consumers by considering the declaration of crypto assets as a financial product under the Financial Advisory and Intermediary Services Act (2002).
- Enhancing monitoring and reporting of crypto asset transactions to comply with the Exchange Control Regulations of 1961.
These proposed interventions are proactive to protect the consumer and the cryptocurrencies asset service providers.
Cryptocurrencies in Nigeria
Another important player in Africa is Nigeria, which is making significant steps towards widespread acceptance of cryptos in the country despite a reluctant government policy towards the same.
A report by Kucoin highlights that 33.4 million Nigerian people have owned or traded crypto in the last six months. Interestingly, nearly 52 per cent of these Nigerians have allocated over half of their assets to cryptocurrencies.
The report further explains that the staggering growth in crypto adoption across Nigeria has been fuelled by inadequate access to affordable fiat-based financial services in Africa; they use cryptocurrencies as a practical alternative to store and transfer assets.
Kucoin reports that over 70 per cent of existing crypto investors in the West African country will increase their cryptocurrency investments over the next six months.
The value of the naira has depreciated by over 209 per cent in the past six years, which stands as one of the critical drivers for local investors to deflationary eye assets such as ETH, Bitcoin and other digital currencies.
The popularity of digital currencies is on an upward trend in Nigeria, and the adoption rate in the country will more than double in the next year.
As their popularity increases, we look at the top cryptocurrencies with the largest market cap in Africa:
“Every informed person needs to know about bitcoin because it might be one of the world’s most important developments,” says Leon Louw, a Nobel Peace Prize nominee.
Bitcoin is the leading, most used and most popular cryptocurrency in Africa. The market cap for bitcoin stands at US$880 billion globally. As of April 1, 2022, a bitcoin’s price was over $46,300, indicating a growth of over 9,000 per cent.
Ethereum has a market cap of over US$415 billion globally and is the most well-known altcoin. Since its launch to the market, Ethereum has experienced tremendous growth of over 31 000 per cent.
Time believes that ETH could grow by 400 per cent in 2022. It has become a favourite program developer because of its potential applications. For example, smart contracts that automatically execute when conditions are met and NFTs.
A stable coin that has a market cap of over US$79 billion. Additionally, Tether’s value is more consistent as it is backed by stable currencies such as the dollar and the euro.
Market cap of over US$69 billion traded on the binance exchange platform
Other cryptocurrencies that are popular in Africa and the world include Solana, XRP, Cardano, Terra (LUNA) and Avalanche (AVAX).
As the crypto popularity grows, however, cryptocurrency theft in Africa has also increased, especially in South Africa, and the need for regulation guidelines has been high on the government’s list of priorities.