The continent is the third fastest growing bitcoin economy in the world, driven by retail users looking to save and transfer money.
Bitcoin adoption in Africa has exploded over the past year, increasing by more than 1,200%, according to a report from Chainalysis.
The increase in activity in the region has been driven by retail investors who turn to Bitcoin every day to save, send remittances, and conduct peer-to-peer (P2P) transactions.
Artur Schaback, COO and co-founder of the P2P exchange Paxful, told Chainalysis that his platform has seen strong growth in African countries over the past year, especially 57% in Nigeria and more than 300% in Kenya.
In fact, Africa has the highest volume of P2P bitcoin exchanges in the world, as citizens often face banking restrictions at centralized bitcoin entry points.
The ability to buy and use Bitcoin on P2P markets without authorization has also allowed African citizens to bypass government transfer restrictions and move more funds across borders. In 2019, sub-Saharan Africa received at least $ 48 billion in remittances, according to a study by the Brookings Institute. In addition to remittances, Schaback also said that Bitcoin enables African merchants to conduct international business transactions more efficiently.
Users turn to P2P marketplaces to buy Bitcoin and pay for the goods they want to import, which is more efficient than using the traditional banking system. “If you are working with a partner in China to import goods for sale in Nigeria or Kenya, it can be difficult to send enough fiat currency to China to complete your purchases,” Schaback said. “It is often easier to buy Bitcoin locally on a P2P exchange and then send it to your partner.”
The Nigerian government has attempted to respond to the growing awareness and use of Bitcoin on its territory by announcing plans to develop e-naira, its central bank digital currency (CBDC). However, according to Adedeji Owobi, CEO of blockchain consultancy Convexity, citizens have not shown much interest and can continue to use the far superior cash that is Bitcoin. “Last week, at a Nigerian crypto users’ clubhouse, I asked the group if they would use e-naira if the central bank introduced it,” Owonibi told Chainalysis. “
The overwhelming majority of participants said no because they expect the same instability and management problems with Naira today.” Bitcoin and Lightning together have the potential to endow not just Africans, but people around the world with healthy money, financial freedom, and individual sovereignty – achievements that would actually undermine CBDC.