Elizabeth Antidius Shumbusho | Africa Guardian
Cryptocurrency has been making waves across the globe, and Africa is no exception. The recent surge in Bitcoin’s value, particularly in the aftermath of Donald Trump’s election as US president in November, has sparked renewed interest in its potential impact on the continent.
A $1 Billion Pizza Transaction: A Look Back
In 2010, one of the earliest cryptocurrency purchases was two pizzas bought for 10,000 bitcoins (BTC). At the time, one BTC was worth a mere $0.003. Fast forward to today, and that same transaction would be valued at a staggering $1 billion.
This meteoric rise was bolstered by Trump’s pro-crypto stance during his second term. After his re-election in November, Bitcoin reached a record high of $106,490 in December, spurred by his appointments of pro-cryptocurrency advocates like Paul Atkins to lead the US Securities and Exchange Commission and David Sacks as the White House “crypto czar.”
Africa’s Growing Crypto Ecosystem
Bitcoin’s renewed momentum is resonating in Africa, particularly in nations like Nigeria, the Central African Republic (CAR), and Morocco. Nigeria, the continent’s largest crypto market, has become a hub for virtual currencies due to its currency devaluations and stringent banking policies. Meanwhile, CAR has recognized Bitcoin as legal tender since 2022, following in El Salvador’s footsteps.
Morocco is also making moves to integrate crypto into its economy. In November, its central bank announced plans to legalize virtual currencies, marking a significant shift from the country’s 2017 ban.
Why Bitcoin Appeals to Africa
Cryptocurrencies, underpinned by decentralized blockchain technology, hold unique appeal in Africa. In a region where over half the population remains unbanked and trust in traditional financial systems is low, digital currencies offer an alternative path to financial inclusion. Between July 2023 and June 2024, sub-Saharan Africa received $125 billion in blockchain transactions, exceeding Kenya’s annual GDP.
Although this accounts for just 2.7% of global cryptocurrency transactions, Africa ranks third globally in terms of user numbers, with 44 million people engaging with crypto.
Nigeria: Africa’s Cryptocurrency Leader
Nigeria stands out as a global leader in cryptocurrency adoption, ranking second worldwide in the 2024 Global Crypto Adoption Index by Chainalysis. Nearly a third of Nigerians actively use cryptocurrencies for purposes beyond profit-seeking, such as business transactions, hedging against inflation, and facilitating remittances.
Sub-Saharan Africa leads in decentralized finance (DeFi) adoption, with platforms like Ethereum enabling small businesses and entrepreneurs to bypass traditional banking barriers and conduct affordable cross-border transactions.
Stablecoins Mitigate Currency Volatility
In regions grappling with volatile local currencies, stablecoins such as USD Coin and Tether offer a practical solution. These dollar-pegged digital assets protect value, streamline international payments, and account for 43% of sub-Saharan Africa’s crypto transactions. In Nigeria, stablecoins are particularly popular for hedging against naira devaluation.
Challenges: Fraud, Energy, and Regulation
Despite its promise, cryptocurrency adoption in Africa faces significant challenges. Limited internet access, regulatory uncertainty, and concerns about money laundering and fraud have hindered widespread use.
Another pressing issue is energy consumption. Bitcoin mining alone consumes over 121 terawatt-hours annually—more than Argentina’s total energy usage. This has led countries like China to ban mining, pushing operations to regions with cheaper electricity, such as Ethiopia. Despite crypto being illegal in Ethiopia, its low-cost energy has attracted around 20 bitcoin farms, even as half the population lacks electricity access.
A Pivotal Moment
As Bitcoin and other cryptocurrencies gain traction, Africa stands at a crossroads. While challenges persist, the potential for financial inclusion, innovation, and economic empowerment is immense. If supported by robust infrastructure, clear regulations, and investments in renewable energy, Africa could position itself as a global leader in the crypto economy.
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