At the beginning of 2020, most people in the world dismissed the COVID-19 expansion through Asia as something temporary. The following months would prove them wrong. The pandemic wreaked havoc across the financial sector everywhere and halted commercial activities.
In Africa, citizens turned to Bitcoin and cryptocurrencies to send and receive money. A large portion of the population in the region is unbanked and has almost no access to the financial system.
Despite the dire situation, banking institutions and remittances services shut down their door, but the Bitcoin network kept on going without interruptions. In this context, African citizens discovered the potential of cryptocurrencies as stores of value and investment tools.
As the COVID-19 pandemic unraveled, Bitcoin took a dive to a 2020 low of around $4,000, only to go into a massive rally at year's end. At its peak, the first cryptocurrency by market cap alone recorded an all-time high of $64,000 and a return of over 500% for BTC holders.
In a report conducted by leading crypto exchange Luno and Arcane Research, called “The State of Crypto Africa”, the region was classified “as one of, if not the most promising region for the adoption of cryptocurrencies”. The report claims Africa has “unique” characteristics and economic and demographic trends suited for crypto adoption.
Countries such as Nigeria, Kenya, South Africa, and others, are rapidly becoming crypto innovation hubs and fertile territory for this industry. Relevant figures within and outside the crypto space have acknowledged this phenomenon, including the CEO of Twitter and Square Jack Dorsey.
The entrepreneur and Bitcoin bull spend a season living in Africa and have contributed with projects in the region to help the communities via Bitcoin donations, and programs. In one of his most famous quotes about the future of Bitcoin and Africa, Dorsey said that it “will define the future” (especially the BTC one).
Amongst the many characteristics that favored crypto adoption in Africa, the continent benefits from a young and tech-savvy population able to pick up new tools quickly. In addition, the large portion of unbanked citizens creates another incentive for people to find innovative ways to transfer money and access financial products.
Sergey Ordin, Marketing Director for the International Crypto Community
Roy Club, with members in the African region, said the following on the crypto outlook in these countries:
People in Africa are very advanced users of digital services. They have no problems with mastering new technologies. They have remarkably high interest toward innovative financial opportunities with low entry levels, especially among young generations that are looking for ways to financial independence.
The Roy Club launched in Africa during the great wave of crypto adoption driven by the COVID-19 pandemic. The organization has seen success due to its creative model that supports crypto investing, its members now rank over 100,000 people, or 15% of its global participants estimated at 700,000.
As mentioned, crypto made its way into Africa via one beachhead: remittances. Data from the World Bank indicates that sending money to the Sub-Saharan region in the continent has some of the highest fees in the world.
Thus, the adoption of Bitcoin and its second-layer payment solution Lightning Network, and other low-cost cryptocurrencies became a vital tool. While a BTC Lightning transaction allows the remitter to pay less than 1% of the total value, traditional services take more than 9% of the value. The benefits are clear for the average African citizen, crypto adoption is necessary.
The COVID-19 pandemic had devastating consequences for people in Africa that contributed to the latter. Due to the lockdown measures, the slowdown in economic activities, and a rise in inflation, unemployment rates soared.
Therefore, people started using cryptocurrencies as a way to increase their income, and for access to financial products based on digital assets capable of generating yield. Bitcoin and cryptocurrencies became a lifesaver for a large portion of the Africa population. Nena Nwachukwu, Regional Manager at Paxful said the following:
"With devaluation and recession causing Naira depreciation, individuals and even businesses are looking to hedge the value of their funds using a good investment tool."
Crypto investors in Africa found a way to not just protect themselves from inflation, but also to increase their net worth. However, May 2021 saw the price of Bitcoin pulling back to its yearly open at around $30,000.
It was time for these same investors to find a new and more efficient way to generate yield. Thus, many choose to participate in Staking Programs to receive rewards provided to those that hold the tokens of a Proof-of-Stake network.
This mechanism is more energy-efficient, has less constraint in the requirements needed to participate, and the user doesn’t need to own expensive and specialized hardware. All it requires is for the investors to hold a certain amount of a token, place them in a wallet, start securing the network, and validate blocks.
The Roy School and the Roy Academy provide users with both educational resources and market opportunities to leverage the benefits of investing in cryptocurrencies and digital assets. Its Marketing Director Sergey Ordin highlighted that African crypto users have a deep interest in staking and staking pools.
Via this decentralized mechanism, many crypto owners can combine their funds to increase their profits. In addition, users can benefit from instant and free transactions with the opportunity to grow 5% to 40% every month, depending on the pool they decide to participate in.
In conclusion, crypto is at the next frontier of financial and investment products and Africa is taking full advantage of its potential. According to the CEO of leading African crypto exchange Quidax, Buchi Okoro, the crypto market has held a large portion of their users to acquire financial freedom. Okoro added:
"From our conversations with our customers, we have a lot of people using crypto to earn a living."
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