The report revealed that Africa had recorded 1,200% growth since June last year, with the need for cheaper remittances, the rise of peer-to-peer trading, and savings needs leading the growth.
In the one year from July 2020 to June 2021, Africa received $105.6 billion worth of digital currencies. Chainalysis further disclosed that Africa also has the most dynamic market, with five countries from the region ranking in the top 20 of the Global Crypto Adoption Index. The countries are Kenya, Nigeria, South Africa, Ghana, and Tanzania.
One of the aspects of the African cryptocurrency market that set it apart is the prevalence of retail holders and traders. Chainalysis reports that the region has a 7% share of the market being retail and small-sized payments, higher than the global average at 5.5%.
For Africa, peer-to-peer platforms are a lifeline for the Bitcoin market. The New York-based blockchain analytics company revealed that no other region uses P2P platforms more. Kenya has ranked for the past two years as the world leader in P2P volume.
This growth has been spurred by several factors, including an aversion by financial institutions in countries like Kenya and Nigeria against cryptocurrency platforms.
“In many of these frontier markets, people can’t send money from their bank accounts to a centralized exchange, so they rely on P2P,” Artur Schaback, the COO and co-founder of the popular Paxful P2P platform, told Chainalysis.
The P2P market is expanding even beyond the traditional platforms and into messaging platforms such as WhatsApp and Telegram.
Adedeji Owonibi, the founder of Nigerian blockchain consultancy firm Convexity, explained, “In many of these frontier markets, people can’t send money from their bank accounts to a centralized exchange, so they rely on P2P.”