Originally designed as a means of payment, many use Bitcoin only as an object of speculation. Not so in some countries in Africa.
Chainalysis has now observed traffic and trading patterns related to crypto transactions. It turned out that Bitcoin in particular is used as a means of payment in some African countries.
As Chainalysis claims to have found out, the volume of monthly Bitcoin transfers under $ 10,000 to and from the African continent grew to a total of $ 360 million in June 2020. This corresponds to an increase of 55 percent over the previous year. These transactions are typical of individuals and smaller businesses. The pure number of monthly transfers has also almost doubled to 600,700. Chainalysis was able to locate the majority of its activities in Nigeria, South Africa and Kenya.
The transactions are less about everyday purchases such as groceries. However, traders, who often source their goods from China or the United Arab Emirates, unanimously report to Reuters that their trading partners have asked to switch to cryptocurrencies. The advantages are obvious: Payments can be made faster and more conveniently, there are no exchange fees.
However, the practice is far from risk-free; the exchange between the national currency and Bitcoin is carried out via unlicensed brokers. The Nigerian state is also making it clear that this is not a legal tender and that investors are not protected. Nonetheless, Nigeria saw nearly 50 percent more small-scale transactions in June this year, to $ 56 million. The number of all transactions rose by 55 percent to 120,000.
The fact that Bitcoin is enjoying this increasing popularity in African countries of all places is only surprising at first glance. Many countries on the African continent are characterized by an above-average young and tech-savvy population. Hard dollars – the de facto currency in global trade – are hard to come by with weak currencies. And complex bureaucratic structures make financial transactions even more difficult. Frankline Kihiu, a crypto broker from Nairobi, Kenya, knows this too, and in an interview with Reuters she confirms: “People are very quick to adopt technologies that make their lives easier. In most African countries, there are many government restrictions. With Bitcoin you can ignore it. “