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TRENDS IN CRYPTOCURRENCY ADOPTION IN AFRICA
NAFTALI MURGOR,
naftali@kabarak.ac.ke
Naftali Murgor*1
1MScIT, Computer science and I.T , Kabarak, Nakuru, Kenya.
ABSTRACT
In the advent of cryptocurrency and blockchain technology innovation, there seems to be an
astounding adoption and noticeable growth of the use and adoption of cryptocurrency. This paper
examines the trends of cryptocurrency adoption in Africa and seeks to bring into perspective the
current status of adoption in Africa and global placing of the continent. The study explores the
adoption and use of crypto currency under several perspectives- alternative to various
government-issued money as a medium of exchange, store of value and as a global payment
system. This paper heavily relies on preliminary findings in terms of secondary data of trends
observed. With the use of available literature on adoption of cryptocurrency, this paper attempts
to bring to perspective the current trend, forecast the future of the adoption of cryptocurrency and
the probable impact on the development agenda of the continent.
KEYWORDS: Adoption, trend, Distributed Ledger Technology, Blockchain, Blockchain
Network, Cryptocurrency, Fiat Money, Stable Coins
1. INTRODUCTION
In 2009, Bitcoin launched as the first completely decentralized experimental form of “internet
money” that is powered by Distributed Ledger technology.According to Antonopoulos (2023),a
cryptocurrency is a form of digital money used to store and transmit value among participants in
a blockchain network. A blockchain network is peer-to-peer network architecture built on top of
the internet. The term peer to peer, or P2P means that all computers are peers to each other, each
being equal and that there are no “special” nodes. The network is organized in a mesh and works
in the “flat” topology. “Flat” topology precisely means the network is not segmented into
multiple broadcast areas. Thus, there’s no central server, service nor hierarchy in the network
which makes the network completely decentralized and easy to scale up through addition of new
nodes[1]
Cryptocurrencies are issued on a particular blockchain network with a name and a symbol that is
similar to the way conventional fiat money works. For instance, Blockchain Network has Bitcoin
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as the software that runs on the network and the cryptocurrency issued on the network
(Antonopoulos, 2023). The symbol for the cryptocurrency uniquely identifies the cryptocurrency
on various peer-to-peer exchanges. BTC is the symbol for Bitcoin.
Antonopoulos (2023) further explains that cryptocurrency is issued on a blockchain network and
is accessible from any digital device connected to the network running the blockchains network’s
client software named as a “wallet” and governs and caters the “computation” cost for
broadcasting a transaction on the network[3]. Thus, any user connected to the network on any
geographical location with connection to the internet can access, view and submit transactions to
the network. Thus, transactions can be made across any geographical location without censorship
which gives users advantages such as a) Borderless transactions, making transaction to and from
any geographical location (b) Less censorship, from the distributed nature of the blockchain
network (c) Transparency through publicly auditable distributed ledger (d) High accessibility,
available wallets and clients.
Since their inception cryptocurrencies have experienced rapid growth in innovation, adoption,
growth in value and popularity. Several ow have been adopted by merchants, retailers and
individuals as a form of exchange and store of value[3]. The adoption of cryptocurrency has
grown with investors and speculators venturing into usage as a store of value with governments
looking to tax and regulate cryptocurrency. Cryptocurrencies for various utilities. Ethereum
emerged to provide a programmable blockchain where users on the blockchain network can
deploy computer programs named “Smart Contracts” that can be stored and run on the
blockchain when certain pertinent conditions are met.They typically are used to automate the
execution of an agreement so that all participants can be immediately certain of the outcome,
without any intermediary’s involvement or time loss.(4)
Cryptocurrency stems partly from the theory of the philosophy of money where people create
value by creating objects then distancing themselves from those objects and trying to overcome
this distance[5]. According to Simmel(2007), objects considered easily reachable and too close
are considered not valuable. Objects that are not close and scarce were considered valuable.
What also determines value is the scarcity, time and effort required to obtain such objects. With
the advent of universal currency and monetary system, these systems became reconcilable as
everything tended to be expressible in a quantifiable metric: its monetary cost. The philosophy of
Bitcoin follows the same ideology as seen in the philosophy of money with a few exceptions: i)
Bitcoin was designed as decentralized money - with fixed supply that stood stark against fiat
currencies ii) It has no single central authority, owner or entity that runs it; instead a global
network that runs on it’s open source software(Bitcoin Core)
This paper seeks to bring into perspective the current status of adoption of cryptocurrency in
Africa. Through the examination of existing literature, this paper attempts to forecast the future
of the said technology and the projected impact on the development of the continent.
2. METHODOLOGY
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An Integrated Literature survey research approach was adopted in this paper. This involved
performing a traditional search to identify relevant research and cryptocurrency adoption
statistics in Africa. The search was conducted using keywords such as “global cryptocurrency
market capitalization”, “Adoption of cryptocurrency”, “blockchain technology in Africa”. To
further narrow down the research, only articles with the mentioned keywords were chosen.
Further focus on the articles was narrowing further to secondary data that showed quantitative
data on the market capitalization of cryptocurrency as this would be relevant in concluding the
study by comparing the market capitalization(this is the market value of cryptocurrency, obtained
by multiplying the current volume of cryptocurrency in circulation by the value of single
cryptocurrency in US dollars). This approach led to the identification of key publications,
technical reports, research papers and related literature in identifying cryptocurrency adoption in
Africa. A critical review of the literature was then conducted to identify the global state of
cryptocurrency adoption and the global standing of Africa. Relevant and updated secondary data
was also extracted. The secondary data would give the indication of the evolution, the current
statistics would give an indication of the adoption of cryptocurrency in the continent. The review
aimed also to establish factors motivating the adoption of cryptocurrency and the factors
hindering the adoption altogether.
3. THE GLOBAL STATUS OF CRYPTOCURRENCY ADOPTION: WHAT IS THE
CURRENT STATUS?
This section examines the global status of cryptocurrency adoption, various cryptocurrencies,
usage, market capitalization as well as regulation with an aim at identifying Africa’s global
position.
A. A GLOBAL OVERVIEW OF THE LEVEL OF OF ADOPTION,
DEVELOPMENT AND USE OF CRYPTOCURRENCY
i) Global Cryptocurrency Market Capitalization in ($) vs Global US Dollar Currency($)
circulation
According to CoinGecko Global Cryptocurrency Market Cap Charts[7], the global market cap
for cryptocurrency has been in an upward trend since 2014. The report shows that the global
cryptocurrency market cap as at July 2023 is $1.25 Trillion, a 25.1% change one year ago with
the market cap of Bitcoin (BTC) at $587 Billion, representing a Bitcoin dominance of 46.88%.
Meanwhile, Stablecoins' market cap is at $128 Billion and has a 10.21% share of the total crypto
market cap. This shows an upward and steady trend in growth in market volume of
cryptocurrency adoption globally. Market capitalization(market cap) refers to the monetary
market value of a company based on outstanding shares of stock. Market capitalization is used to
show the size of the company. In crypto, market cap is measured by multiplication of the
circulating supply of tokens or currency and its current price.
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Fig 1: The total market cap & volume of cryptocurrencies globally, a result of 9,962
cryptocurrencies tracked across 773 exchanges(CoinGecko, 2023)[7]
This crypto market cap from CoinGecko shows an upward trend since 2014. This shows an
adoption and a tremendous growth in the cryptocurrency usage, adoption globally since the
introduction of Bitcoin. The US Federal Reserve shows a total of $2.2335T US Dollar in
circulation(Federal Reserve) while Euro stands at a total of $1.5T as of July 2023.
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Fig 2: Chart showing US currency($) in circulation at a current level of 2.335T and the trend
over the last 5 years(2018-2023) Source (US Federal Reserve)[8]
The US currency circulation trend over the past five years shows some interesting incites
compared to the cryptocurrency market capitalization. While the US currency only shows the
currency circulation trend, the CryptoCurrency chart shows an upward trend in adoption with
more CryptoCurrencies being added over the years. This implies a growing market capitalization
of cryptocurrency shows an adoption.
This infographic represents a global trend for both Cryptocurrencies and the US currency($).
What utilities do cryptocurrencies serve? By taking this direction in interpreting the trend, it
becomes much easier to: Determine the utility of cryptocurrency as an alternative to government
issued fiat currency and generally get a better overview of the global adoption of cryptocurrency
as an alternate monetary system and finally draw a conclusion for this paper, Where does Africa
stand globally?
4. AN OVERVIEW OF CRYPTOCURRENCY ADOPTION GLOBALLY
This section aims to provide an analysis of the extent of adoption of cryptocurrency globally,
metrics used to assess the levels of adoption and most importantly how Africa is placed in terms
of the metrics put in consideration to investigate the same.
A. Global Cryptocurrency Adoption Index
According to Chainalysis(2022)[11] there's been an upward trend in the adoption as shown in the
following map showing the global adoption index of adoption for each country at a scale of 0 to
5
1. The index was obtained by ranking all 146 countries based on available sufficient data. A
country’s index was obtained by taking the geometric mean of a country's ranking in all five
picked metrics and then normalizing the final number obtained on a scale of 0 to 1. The closer
the number to 1, the higher the rank and hence the higher the adoption of cryptocurrency for the
country.
Fig3: An interactive map, Chainalysis(2023) showing cryptocurrency adoption index
score index for various countries globally. [11]
Subindexes were also obtained by analyzing web traffic coupled with analyzing a country’s
transaction volumes. These metrics were obtained by measuring activity of individual and non
individual cryptocurrency users across centralized cryptocurrency exchanges. Individual activity
was estimated by measuring their amount of cryptocurrency moved in retail transactions which
were designated as any amount of cryptocurrency transaction worth < $10,000 USD worth of
cryptocurrency. This metrics was then used to ranked each country purchasing power parity
(PPA)[12]
The data collected by Chainalysis(2022) shows that cryptocurrency adoption has grown rapidly
as from mid-2019 and leveled off in the Q4 of 2021 as shown in the chart.
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Fig4: Global index score of cryptocurrency adoption by Quarter
2019-2022[12]
B. Global Cryptocurrency Adoption Index: Where Is Africa?
According to the Chainalysis report, (2022), Kenya ranks 19th out 20 top countries with a
higher cryptocurrency activity signaling use of various cryptocurrencies globally with an
adoption index of 0.37. As per the same report, Nigeria ranks 11th globally with an adoption
index of 0.5. Morocco ranked 14th globally with an adoption index of 0.507[12]
P2P (Peer to Peer) exchanges were considered important as most retail orders(orders
exchanging cryptocurrency for US Dollars) offered interesting insights of most adoption
patterns. Sub-saharan Africa accounts for a small fraction of P2P transaction volume with
$100.6 billion on-chain volume between 2021 and 2022[13].
TABLE II: THE 2022 GLOBAL CRYPTO ADOPTION INDEX TOP 20 COUNTRIES,
CHAINALYSIS
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Country
Overall
index
ranking
Centralized
service value
received
ranking
Retail
centralized
service value
received
ranking
P2P
exchange
trade
volume
ranking
DeFi value
received
ranking
Retail DeFi value
received ranking
Vietnam
1
5
5
2
7
6
Philippines
2
4
4
66
13
5
Ukraine
3
6
6
39
10
14
India
4
1
1
82
1
1
United States
5
3
3
111
3
2
Pakistan
6
10
10
50
22
16
Brazil
7
7
7
113
8
7
Thailand
8
12
12
61
5
3
Russia
9
8
8
109
11
12
China
10
2
2
144
6
4
Nigeria
11
18
18
17
20
17
Turkey
12
9
9
121
19
15
Argentina
13
13
13
26
21
25
Morocco
14
19
19
21
33
18
Colombia
15
23
23
10
27
29
Nepal
16
17
17
19
34
41
United
Kingdom
17
14
14
71
12
11
Ecuador
18
37
37
6
45
56
Kenya
19
43
43
5
9
34
Indonesia
20
16
16
129
18
13
Fig5: The 2022 Global Crypto Adoption Index Top 20 countries globally, Chainalysis(2022)[12]
The P2P on-chain transaction volume accounts for 2% of global activity but accounts for a 16%
growth from the prior year[13]. Onchain transactions are cryptocurrency transactions carried on
respective chains carried out on various centralized crypto exchanges.
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Fig 6: A line graph showing all cryptocurrency value received by region, March 2019 to June
2022[13]
However numbers can be deceiving as a deeper analysis by Chainalysis shows that Africa has
some of the most well developed cryptocurrency markets with cryptocurrency forming a means
for day-to-day financial activity by many users. This is seen primarily in Nigeria and Kenya
which ranked at position 11 and 19 respectively as seen in Chainalysis analysis providing
Cryptocurrency Adoption index[13][12]. Both countries show a strong adoption especially on
P2P exchanges which is considered crucial for the countries’ crypto adoption. Of the countries
studied by Chainalysis, other countries like Morocco ranked at position 14 in the adoption index
globally. Malawi ranked at 138 globally in Adoption Index while South Africa led in the region
in raw cryptocurrency transaction volumes and also ranks 30th globally in Adoption Index[14]
5. ADOPTION AND USE OF CRYPTOCURRENCY IN AFRICA
This section explores the cryptocurrency adoption and factors that contribute to the adoption and
use of cryptocurrency of adoption in the continent.
A. Factors affecting adoption of cryptocurrency
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Sub Saharan Africa retail and P2P activity makes Africa unique compared to other regions of the
globe[13]. Retail sized transactions (these are transactions less than $10,000 in value) make up to
6.4% of the total transaction volume[13] compared to any other region. The role of retail
becomes more important to focus when we look into the number of individual transfers. It’s
worth noting that retail orders make up to 95% of all the transaction volume, narrowing down to
retail transfers less than $1000 the percentage stands at 80% for the region, which is greater than
any other region.
Fig 7: A chart showing the percentage of small retail transfers per region July 2021 - June
2022[13]
According to the Chainalysis report, crypto usage is driven by everyday necessity as opposed
to speculation by the already well-of which explains an interesting phenomenon and trend in
Sub-Saharan Africa: a continued cryptocurrency activity despite price fluctuations in
cryptocurrency such as Bitcoin, Ethereum[13]
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Fig 8: A graph showing growth of transfers by size for small retail transactions by value
(transfers less than $1000) compared to other transfers in Sub-Saharan Africa[13]
The continued trend in growth of retail transfers shows that there is an increase in use of
cryptocurrency driven by daily necessity especially for countries with unstable currencies such as
Kenya and Nigeria[14] This shows also a continued rise in retail orders despite price fluctuations
in Bitcoin and Ethereum from January 2022- June 2022[14]. This shows that there is a continued
use of cryptocurrency in the region despite these price fluctuations with adoption stablecoins
such as Tether[14].
The rise of P2P(peer to peer) exchange platforms is also another factor affecting adoption and
use in sub-Saharan Africa[15]. According to a report by Chainalysis, Africa leads in trade
volume on P2P platforms. P2P accounts for 6% of transaction volume in Africa which is double
the next closest region in central and southern Asia and Oceania at 3.1%[14].
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Fig 9: A chart showing Sub-Saharan Africa P2P share in cryptocurrency transaction in
volume by region from July 2021 - June 2022[14]
This indicates that no other region uses P2P exchange more than Sub-Saharan Africa[14] The
continued use of P2P in the region is due to the ban and the unknown government regulation
in the adoption and use of cryptocurrencies. Through an Act of Parliament, the Nigerian
government prohibited all banks from using cryptocurrencies in 2021[14]. This however did
not dampen down the cryptocurrency transaction volume in the country.
Remittance payments are also another contributing factor[15]. Remittance payments are
money sent by families in diaspora to their families[15]. Chainalysis shows that Africa
received a total of $48.0billion of estimated remittances despite the payments coming from
Europe and America some come from other African countries [15]. A Chainalysis report
predicts a trend in use of cryptocurrency in Africa for international payments[]16]. The
following chart shows monthly growth of cryptocurrency payments (less than $1000) in both
volume and transfers which Chainalysis considers an upper boundary that constitutes
remittance to African countries[16].
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Fig 10: A chart showing the growing rate in transfers per month between April 2019 to June
2021[16]
Many African users also use crypto for international transactions[16]. A good example is given
by a Chainalysis report: An importer importing goods from China finds it hard to convert native
currency to the fiat currency required to complete the purchase[]16]. It becomes much easier to
buy Bitcoin on a P2P exchange and send it to the exporter[16]
Another factor contributing to cryptocurrency adoption in the region is volatile fiat currency[15],
for instance the Nigerian Naira losing 52% of its value making users in the region opt for stable
coins such as Tether. According to Binance, Kenya shillings has been losing its value by -22%
since mid-2022, a factor that has seen rise in cryptocurrency activities in the region to preserve
their savings amid high volatility of their native fiat countries[15].
6. KEY TAKEAWAYS ON THE ADOPTION TRENDS IN AFRICA
Cryptocurrency is gradually taking adoption in Africa and this trend in adoption can be attributed
to:
●Use of cryptocurrency on daily basis for small payments through the availability of
P2P(peer to peer) marketplaces[16]
●High volatility in native currency in countries such as Nigeria and Kenya has seen users
opt for stable coins such as Tether(a stable coin pegged to the US dollar) as way to
preserve value amid the steady decline in the value of the native currencies[15]
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●Remittance payments have made cryptocurrency a go-to solution compared to the
traditional way of sending money to families overseas due to leniency of cryptocurrency
and flexibility for cross-border payments[16]
●P2P exchanges have largely contributed to the use of cryptocurrency in Sub-Saharan
Africa[16]. This observed trend by the Chainalysis Report in 2021 can be largely
attributed to the ability to make small transfers termed as “retail transfers” in
cryptocurrency from $1000 to $10,000[16]. This made cryptocurrency suitable for
making small payments as the P2P platforms offered integration with traditional payment
methods[16].
●According to Chainalysis, International payments have been made much easier with
cryptocurrency and P2P platforms as importers can buy Ethereum/Bitcoin and pay
exporters to facilitate trade from a country such as China[16]
●Sub-Saharan Africa leads globally in Peer to Peer transfers share by volume at 6%
followed closely by Central Asia & Oceania at 3%[14]
●Globally, the current market capitalization (Market Value in US Dollars) of the
cryptocurrency market stands at approximately $4.0 trillion according to CoinGecko, an
upward trend from approximately $1.0 trillion in 2018[7]
7. FUTURE TREND OF ADOPTION AND GROWTH IN AFRICA
As reported by Chainalysis(2022)[13] cryptocurrency is silently thriving in Africa with Nigeria
ranking 11th globally, Kenya at 19th position globally according to the crypto Adoption Index.
The region also ranks the highest in retail transfers($1,000-$10,000) compared to any other
region[14]. What is the future adoption trend for the region?
According to Chainalysis[16], cryptocurrency trading activity has significantly increased over
the years by a margin of 400% in 2 years in Nigeria, followed closely by Kenya, South Africa,
Cameroon among other countries in the region showing a significant growth. This can be seen in
the graph shown, more traffic to Cryptocurrency websites shows a continued activity and
adoption as more residents in the region become more aware and involved in the use of
cryptocurrency.
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Fig 11: A chart showing visits to cryptocurrency sites per year per each country quarterly
201-2022 [16]
Overall, cryptocurrency adoption in the region is expected to rise and continue growing provided
cryptocurrency continues to solve the problems that faced in the region that cryptocurrency can
solve such as less stringent cross-border international payments, preserving value of savings
resulting from extreme economic volatility in the region.
8. CONCLUSION
Despite African countries like Nigeria, Morocco and Kenya ranking at position 11, 14 and 19
globally[12] as per the Chainalysis report in 2022, Africa leads in Peer to Peer (P2P) trading
volume share at 6.1% which is the highest compared to any other region. This shows that a lot of
users in the region use cryptocurrency for small transfers and hence on a daily basis which is an
amazing trend that would likely be observed in future. The observed P2P activity in the region
signals that most transfers carried in the region are aimed at making payments both locally and
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cross border since peer-to-peer trading allows exchange for cryptocurrencies for fiat currencies
and vice versa. The trend adoption of cryptocurrency adoption in Africa is majorly attributed to:
High economic volatility of native currencies, strict remittance payments controls, availability of
P2P services in the region and strict international payment controls. Cryptocurrency is essential
for development in Africa despite the legislation on the adoption hanging in the balance.
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https://blog.chainalysis.com/reports/2022-global-crypto-adoption-index/
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Sub-Saharan Africa
https://blog.chainalysis.com/reports/sub-saharan-africa-cryptocurrency-geography-report-
2022-preview/
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https://www.coindesk.com/business/2022/09/29/crypto-is-quietly-thriving-in-sub-saharan
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15. Binance. (2023). 6 Factors Influencing The Adoption of Cryptocurrency In Africa.
https://www.binance.com/en-NG/blog/all/6-factors-influencing-the-adoption-of-cryptocur
rency-in-africa-421499824684903666
16. Chainalysis. (2021). P2P Platforms, Remittances, and Savings Needs Power Africa’s
Grassroots Cryptocurrency Adoption.
https://blog.chainalysis.com/reports/africas-grassroots-cryptocurrency-adoption/
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