Adoption and use of Bitcoin in Sub-Saharan Africa are the highest in the world
News translated from Exame
While widely adopted by major economies such as the United States, Bitcoin stands out as an alternative in countries facing economic crises. This is the case in Sub-Saharan African countries, where the use and adoption of the leading cryptocurrency are the highest in the world, according to a research report released on Tuesday, September 19, by Chainalysis.
The Sub-Saharan Africa region encompasses 47 countries and corresponds to the part of the African continent located south of the Sahara Desert.
In the Global Cryptocurrency Adoption Index for the past year, recently revealed by Chainalysis, Nigeria ranked second, behind only India, in terms of cryptocurrency adoption. The growth rate is 9%, and the country is among the six in the world that have seen an increase in crypto transaction volume year over year.
Since 2016, Nigeria has experienced two major recessions fueled by political instability, the COVID-19 pandemic, and the collapse of oil prices. The Naira, which introduced its digital version, has depreciated, and interest in Bitcoin and stablecoins, value-stable cryptocurrencies that track the price of a specific asset, has increased in the country.
Other countries in the Sub-Saharan Africa region also face similar economic crises, such as Kenya and South Africa. For example, Ghana recorded an inflation rate of 29.8% in June 2022, the highest level in the past two decades.
The experts at Chainalysis point out in the study that the crisis situation may have incentivized the adoption of Bitcoin in the region. The leading cryptocurrency is considered by many as "digital gold" due to its potential as a store of value and protection against inflation.
For similar reasons, stablecoins have also attracted the attention of Sub-Saharan people. Moyo Sodipo, co-founder and CPO of the Nigerian-based cryptocurrency exchange Busha, said that Bitcoin and stablecoins are the preferred assets of their customers. The Chainalysis study also showed that the use of local crypto exchanges still surpasses that of foreign companies.
"When Busha gained popularity around 2019 and 2020, there was a huge frenzy around Bitcoin. Many people initially weren't interested in stablecoins. Now that Bitcoin has lost much of its value, there is a desire for diversification between Bitcoin and stablecoins. However, market changes are not dampening activity. People are constantly looking for opportunities to protect themselves against the devaluation of the Naira and the persistent economic decline since COVID-19," said Sodipo to Chainalysis.
Additionally, investors in the region also seek riskier opportunities to profit from cryptocurrencies. According to Sodipo, in addition to Bitcoin and stablecoins, there are also those who like to invest in "meme cryptocurrencies" that are currently popular.
"On days when the market crashes, we also see a buying frenzy. It depends on the market dynamics at that moment. When a new memecoin, like Dogecoin or Shiba [Inu], emerges, there is also a buying frenzy. There will always be someone interested in a token that seems capable of yielding the next thousands of dollars," he said.