According to Chainalysis, the volume of monthly BTC transfers under $10,000 to and from Africa grew to $316 million in June 2020. This is an increase of over 55% in just one year.
The number of monthly transfers has also almost doubled to almost 601,000. According to the news portal Reuters, many companies have asked their trading partners to switch to cryptocurrencies.
Both the economic problems with which African countries are struggling, particularly due to the Corona crisis, and the simplicity and speed of international transactions through the cryptocurrency, are motivating many to use Bitcoin.
For a large part of crypto-users, cryptocurrencies like Bitcoin are rather assets for price speculation. Particularly because of the bank situation strained by the Corona crisis the cryptocurrency becomes ever more interesting for many also as inflation protection. That Bitcoin is used just as actively as means of payment, however, is shown by blockchain data from Africa. There a real „boom“ is taking place and more and more small businesses are relying on BTC as a fast and simple transaction option.
Active crypto use in Africa is increasing
As data from the well-known blockchain-company Chainalysis show, the volume of monthly BTC transfers in Africa has increased immensely. For example, the volume of monthly transactions under $10,000 to and from Africa grew to $316 million in June 2020. This represents an increase of over 55% in just one year. Within this size, transactions are mostly carried out by individuals and small businesses.
But the absolute number of transactions themselves also increased. The number of monthly transfers has almost doubled to 601,000. According to Chainalysis, most of the activity was observed in Nigeria, South Africa and Kenya.
The transactions are not so much everyday purchases as payment for the import and export of goods. According to the news-and-media-portal Reuters, traders who receive most of their goods from China or the United Arab Emirates have asked their trading partners to switch to cryptocurrencies. After all, they are proving to be quick and easy when it comes to payments. Expensive exchange fees as well as bureaucratic hurdles, that would make foreign transfers difficult are eliminated.
Frankline Kihiu, crypto-broker in Nairobi said the following in an interview with Reuters:
„People are very adoptive of any technology that will make their life easier … In most African countries, there are lots of government restrictions that Bitcoin takes away.“
Although the switch between the national currency and Bitcoin is done through non-licensed brokers, this immense increase has taken place. Even when the Nigerian state has clearly indicated, that investors are not protected, the number of transactions in Nigeria has increased by 55%.
Bitcoin as an alternative for commodity trading in economically weak countries
As Reuters reports, above all young and technically talented people set on the cryptocurrency. And many countries in Africa are characterized mainly by such a young and technically experienced population. For these people Bitcoin offers itself as real alternative in relation to the conventional monetary system. Above all also because the dollar, the main currency of the world-wide trade is to be gotten only with difficulty by weak currencies.
In Africa we can now exactly see, for what Bitcoin was originally intended for. Crypto-money offers a real alternative to the conventional monetary system, especially for people in economically weak countries, because it offers a certain stability.
A good example is Nigeria. The most populous country in Africa derives about 80% of its state revenue from the crude oil trade. When an immense decline in oil prices was caused by the Corona crisis, the national currency Naira experienced a drastic devaluation.
Nigeria exports a lot of oil, but has to import many other goods. Due to the devalued Naira, importers now had to spend much more money to pay the prices in US-Dollars. A possible solution for many of them was Bitcoin, as the main international currency for trade could be circumvented.
Both the economic problems and the simplicity with which the cryptocurrency can be handled have obviously led to an immense demand in Africa, the second largest continent in the world. A currency to which anyone can have access, which transcends borders and where your origin does not matter.
It will remain interesting to see if Bitcoin can help solve further economic problems in similar areas.