Cryptocurrencies have become popular amongst the African market as a store of value and a cost-effective way to transfer funds. According to information by Chainanalysis, more than 600 000 monthly crypto transfers occur to and from Africa. What’s more is the increase in the volume of monthly transactions under $10 000. The volume grew to $316 million in June 2020 and represents an increase of 55% in one year.
In June alone, almost $1 billion worth of cryptocurrencies transactions took place across Africa. The countries that recorded the majority of cryptocurrency transfers are Nigeria, South Africa and Kenya.
The reason for the 55% increase, according to the Chainanalysis report, is for the import and export of goods. According to an article by Reuters, traders have switched to cryptocurrency payments when purchasing goods from China and the United Arab Emirates.
Why is Africa turning to cryptocurrency transfers?It should come as no surprise that the second largest continent in the world, is reporting an increase in cryptocurrency transfers. Cryptocurrencies offer traders a simple way to transfer funds across borders whilst protecting funds from bureaucratic hurdles.
It is a fact that many African countries face challenges of currency devaluation and instability. For example, the South African Rand (ZAR) has lost more than 50% against the U.S. Dollar over the last decade. Thus, making way for cryptocurrencies to become the preferred store of value for the African market and act as a hedge during uncertain times.
Besides using cryptocurrencies to conduct business, family members make use of cryptocurrencies to send money back home. Fees for fiat remittance can cost between 8.9 – 20% but Bitcoin fees are typically well below 3%. Cryptocurrencies are making it easier and more cost-effective to send money across borders.