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Cryptocurrency adoption in Africa

The adoption of crypto in Africa is on the rise. As more plausible use cases for digital currencies emerge users are taking advantage of a convenient, ubiquitous, and direct peer-to-peer means for remittance payments, international commerce, savings, and more.


Chainalysis, a leading cryptocurrency market research firm, recent report reveals key geographic trends on cryptocurrency and highlights the potential growth of African crypto market. Africa has the smallest cryptocurrency economy of any region we analyze in this report, with just $8.0 billion worth having been received and $8.1 billion sent on-chain. Even thought Africa's global value of all cryptocurrencies received and sent is only 2% (Figure 1), there a potential for a greater adoption and penetration of using this digital currency and it will ultimately revolutionize the way traditional financial flows are conducted in the continent.


Figure 1. Summary of Africa’s cryptocurrency usage (July 2019-June 2020)

Source: “The 2020 Geography of Cryptocurrency Report,” Chainalysis, 2020.


Chainalysis's report also discovered that the largest crypto channel connects Africa to East Asia (Figure 2). According to the report, the particularly high volume of funds sent from Africa to East Asia stems from the magnitude of Chinese nationals working in Africa.


Figure 2. Africa’s cryptocurrency counterparts by volume (July 2019-June 2020)

Source: “The 2020 Geography of Cryptocurrency Report,” Chainalysis, 2020.


The report also revealed that among the top ten countries in the Global Crypto Adoption Index, three countries are from Africa (Figure 3).


Figure 3. Top Ten Countries in Global Crypto Adoption Index (July 2019-June 2020)

Source: “The 2020 Geography of Cryptocurrency Report,” Chainalysis, 2020.


Retail-sized transfers (transfers under $10,000 USD) make up a larger share of Africa’s cryptocurrency activity than any other region, and the need for remittances is a big part of this (Figure 4). This shows that Africa engages in the highest rate of retail-sized crypto transfers in the, which the report attributes to the digital currency’s rising popularity for remittance payments. Overseas remittances are a crucial part of the economy for many parts of Africa. The roughly 25 million expats of Sub-Saharan Africans living abroad remitted $48 billion in fiat back to the region in 2019.


Figure 4. Market share of retail-sized (less than $10,000) cryptocurrency transfer Volume by Region (July 2019-June 2020)

Source: “The 2020 Geography of Cryptocurrency Report,” Chainalysis, 2020.


Illicit activity makes up roughly 1.4% of all African cryptocurrency activity by volume, in terms of both sending and receiving, which is about average compared to all other regions (Figure 5). As is the case for all regions, scams and darknet markets make up the vast majority of illicit transaction volume sent and received from Africa. Historically, people in many parts of Africa have fallen victim to financial scams common in the fiat world, such as pyramid schemes and other investment scams.


Figure 5. Illicit Share of All Crypto Sent and Received by Region (July 2019-June 2020)

Source: “The 2020 Geography of Cryptocurrency Report,” Chainalysis, 2020.


Chainalysis predicts the ubiquitous and cost-effective aspect cryptocurrency's sending and receiving of money will catalyze the continued growth of digital currency utilization in Africa. Based on several advantages over traditional financial systems, the report suggest that the relatively small cryptocurrency market in Africa is generating significant value for the early adopters who utilize cryptocurrency.

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