With almost 1.3 billion inhabitants, Africa is the second-most populous continent in the world. African nations have historically struggled with infrastructure concerns as a result of historical issues with colonialism, civil wars, and difficult topography. Due to the decreased accessibility of financial services, almost 57 percent of the population still lacks access to banks.
A smartphone is all that is needed to access blockchain networks thanks to Africa’s weak infrastructure, which also makes it a suitable market for cryptocurrencies. Nigeria, the most populous country in Africa, was previously reported as the world’s leader in the adoption of cryptocurrencies.
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Why is Africa experiencing a boom? Young, tech-savvy demographics that have swiftly acclimated to bitcoin, weaker local currencies that make it more difficult to obtain dollars, the de facto standard of international trade, and complicated bureaucracies that make money transfers more difficult.
The five nations from Nigeria to Botswana represented by the bitcoin users Reuters spoke to said the cryptocurrency was assisting people in making their businesses more profitable and nimble as well as assisting those employed in regions like Europe and North America in keeping more of the money they send home.
There is no safety net and minimal redress if you lose money with bitcoin and other cryptocurrencies because they are illegal in many nations and have an unclear legal status.
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Many people use unofficial brokers to transfer local currency to and from bitcoin. Prices fluctuate frequently, and buying and selling is a challenging procedure that necessitates technical expertise.
The Nigerian central bank issued a warning in 2018 that cryptocurrencies were not recognized as legal cash and left investors exposed.
African wealth and the adoption of cryptocurrencies
The median GDP per person in Sub-Saharan Africa according to the World Bank is $1,483. African wealth output is 22X less than that of the European Union, as their GDP per capita of $33,927. Accordingly, the chain analysis survey discovered that the market share of cryptocurrencies in Africa is the least.
Between July 2020 and June 2021, this amounts to $105.6 billion in crypto assets, representing a 1,200 percent increase in value. Using this metric, Africa has surpassed all other areas in terms of transaction volume for peer-to-peer (P2P) payment networks.
As you can see, Bitcoin remains the most widely used and dominant cryptocurrency. P2P networks are the only workable option for Africa when we take into account that the central banks of the majority of African nations are hostile to bitcoin exchanges – unless they utilize VPNs to access servers in other countries.
In the best-case scenario, a central bank might decide not to regulate the bitcoin industry. For instance, the Central Bank of Kenya advised against dealing in bitcoin in December 2015,
The value of the virtual currency is speculative in nature and has no underpinning or backing in assets. This could cause virtual currency values to fluctuate greatly, exposing users to possible losses.