We’ve looked at what drives cryptocurrency adoption across Africa, the opportunities cryptocurrencies offer, and the challenges holding back more widespread acceptance of digital currencies in the region.
Let’s now take a look at some of the most preferred cryptocurrencies traded, used, and held by African consumers on KuCoin:
Unsurprisingly, the crypto king reigns supreme in the African market. The largest cryptocurrency by market cap is the most popular cryptocurrency invested by long-term holders.
Internationally, Bitcoin (BTC) is seen more as a store of value than a digital transaction method.
The second most popular cryptocurrency used across Africa is Ethereum (ETH). The native crypto asset of the leading dApps platform has made a remarkable uptick in trading volumes in the weeks leading up to The Merge – the transition of Ethereum blockchain from a Proof of Work (PoW) consensus to Proof of Stake (PoS).
Although its price experiences more fluctuations than Bitcoin’s, the lower Ether price makes it more attractive for crypto users in Africa who prefer to hold digital assets long-term.
The more affordable yet highly liquid ETH is the second most popular crypto traded in Africa.
Several crypto enthusiasts in Africa continue to HODL XRP despite the ongoing legal woes between Ripple and the US SEC.
The legal uncertainties have made Ripple (XRP) no less attractive as an asset to trade or invest in among African crypto users.
The low price of XRP makes it highly affordable for several crypto investors in the region, further increasing its preference among the numerous crypto assets in the market to date.
Another classic among cryptocurrencies, Litecoin (LTC) offers an attractive store of value for several crypto HODLers across Africa.
The Litecoin price is subject to lower volatility than Bitcoin and Ethereum, and it is far more affordable to invest in.
The fixed total supply of LTC also makes it a more affordable alternative to Bitcoin for African crypto users to buy and hold.
Transferring cryptocurrency payments in Litecoin is also convenient as its blockchain charges lower transaction costs than many of its peers.
Charles Hoskinson’s creation Cardano (ADA) is another extremely popular cryptocurrency used across Africa.
One of the key reasons behind this could be the Cardano Foundation’s dedicated focus on driving its blockchain technology adoption in the African region.
The ADA token is a preferred altcoin for Africa’s crypto traders to trade, hold, and invest in. There is also considerable interest in staking ADA to earn rewards.
Bitcoin Cash (BCH)
Bitcoin Cash (BCH) is another popular crypto used for P2P payments in the African market. The low price and high liquidity make it a convenient crypto asset to hold and use for transferring payments decentralized and efficiently across the continent and globe.
Transacting using BCH is cheaper and faster than using BTC or ETH. It’s also popular as it is accepted as a payment option by leading businesses worldwide.
USD Coin (USDC)
Circle’s USD Coin (USDC) is also an extremely popular cryptocurrency used by African crypto enthusiasts.
The stablecoin is an easy way to accept payments internationally.
In addition, it offers a convenient way to invest in the US dollar but via the crypto route. Several crypto investors prefer the US dollar and USD-backed stablecoins as an inflation hedge.
Crypto Adoption Challenges in Africa
Even though the opportunities for cryptocurrency adoption in Africa are aplenty, many key challenges are holding back mainstream acceptance of the asset class too. Let’s take a look at some of the pressing issues keeping people off crypto:
Like the world, the absence of cryptocurrency legislation and regulatory acceptance is probably the biggest drawback keeping consumers from adopting and using digital assets.
For instance, the Central African Republic (CAR) announced that it would accept Bitcoin as a legal tender in April 2022, making it the first in Africa and the second globally.
However, the enthusiasm among crypto supporters soon faded when the nation announced a freeze on this regulation and delayed its plans.
The CAR’s flip-flop on Bitcoin as legal tender is but one of many examples hindering investor confidence in crypto assets.
The need of the hour is an enabling environment through international regulation that can be finalized and rolled out across developing economies across sub-Saharan Africa and the rest of the region.
A move like this could help potential investors and businesses adopt cryptocurrencies more confidently and realize efficiencies.
High Volume But Low Value
While Africa is home to some of the fastest emerging markets in the world, e.g., South Africa, it is also a continent with several underdeveloped economies.
The low per capita income relative to the developed world makes it hard for the crypto industry to take the African market seriously.
Although digital currency adoption across some African countries features among the top 20 in the world, the amount remains extremely low in terms of transaction volumes.
While the number of cryptocurrency transactions may seem high, it makes up only 2% of the global crypto activity.
The world of Web 3.0 built on the blockchain data platform requires a good quality internet connection.
Spotty internet connectivity and low network speeds impede crypto consumers from partaking in many lucrative opportunities to earn from cryptos.
A reliable internet connection could help many crypto-savvy African users trade the markets faster, play more Play-to-Earn (P2E) games, and experience the metaverse.
Developed economies worldwide and some nations in the continent are moving to 5G, but it could take longer for the next-gen mobile network to fully roll out across the African market.
Conclusion: How to Expand Crypto Adoption in African Regions
After years of operating on the fringes, past events have reinforced the immense potential of digital currencies to transform how the world banks and uses money.
Mainstream adoption of cryptocurrencies is already underway, not just in the developed world but also in developing economies.
The technological innovation behind digital currencies have the power to bridge the gap between these two markets and bring more interconnected operations in global finance and banking.
In Africa, too, cryptocurrency has the potential to empower a large percentage of the population and help them bank, transact, and interact with anyone located anywhere in the world.
However, nations need to formalize and implement a regulatory framework to manage cryptocurrencies and prevent fraud from scaling up cryptocurrency adoption.
While regulatory requirements remain the foremost challenge, withholding crypto adoption anywhere in the world is especially vital in an emerging market like Africa, where interest is high but financial literacy levels are low.
Some countries are exploring the implementation of a cryptocurrency tax, to make the most of this emerging opportunity and as a way to regulate the sector.
Many countries are exploring the use of central bank digital currencies (CBDCs) as a way to legalize and accept digital currencies.
Additionally, there is a need for better infrastructure to support crypto and blockchain technology, starting with reliable internet connectivity.
Increasing internet penetration and performance could further bolster activity in the African crypto market.
Finally, there is the need for dedicated efforts by crypto and blockchain businesses to foster innovation and adoption of the technology by individuals, businesses, governments, and other establishments.
Such a move will further improve the public’s perception of crypto as a capable financial asset class.