A recent report from Chainalysis has shown significant growth in the African crypto market since last year. The growth is attributed to the rise in P2P platforms and the need to invest in cryptocurrencies to evade high inflation levels.
The report published by Chainalysis on Tuesday also added that the African content had a large share of the retail transaction volumes compared to the overall global volumes.
Significant Growth: Chainalysis
The report stated that the market had increased by over 1200% between July 2020 and June 2021. The countries that experienced the highest levels of Adoption included Kenya, Nigeria, South Africa and Tanzania.
According to Chainalysis, the growth in the crypto sector was attributed to the increased popularity of P2P platforms. These platforms are used by those who want to trade crypto in countries that have banned citizens from sending money from local banks to crypto exchanges.
The report also states that around $105.6 billion worth of cryptocurrencies were sent to the continent over the past year. Besides, Africa’s crypto retail market was bigger than any other region globally. The overall transaction volumes show that retail-sized transfers came in at 7%, compared to the 5.5% global average.
P2P Platforms Fuelling Adoption
The booming crypto adoption in the region was attributed to the increased popularity of P2P platforms such as Paxful and LocalBitcoins. The two platforms accounted for 1.2% of all the crypto transactions in the continent.
According to Paxful’s co-founder and COO, Artur Schaback, the increased use of P2P platforms is because of the restrictions that prevent people from sending money from local banks to crypto exchanges.
“Crypto products are getting more user-friendly, so they can onboard more people into the crypto economy and help them see that crypto is faster, cheaper and more convenient,” Schaback stated.
Other factors that could have fuelled the growing crypto adoption include remittances, which help people circumvent the restrictions that governments have set regarding the amount of money one can send abroad.
Crypto adoption could also be attributed to the fact that cryptocurrencies offer a faster and cheaper way of paying for international commercial transactions. It also enables people to save their money and avoid inflation from the declining value of fiat currencies.
Nigeria has planned to commence the pilot phase for the eNaira from October 1. South Africa has also partnered with Australia, Malaysia and Singapore to launch a virtual currency pegged to the country’s fiat currency.