Outsiders claim the sole purpose of bitcoin is speculation. Still, the data presents a much different picture in which these people who have declared the digital currency dead hundreds of times conveniently ignore.
As we reported several times, the use of bitcoin and stablecoins have been gaining a lot of traction in Argentina, Venezuela, Africa, and other parts of the world.
In these regions, cryptocurrencies are being used as a hedge against currency debasement. In Africa, especially, the use of cryptos is booming.
While weaker local currencies and complex bureaucracy are pushing people towards bitcoin, the young and tech-savvy population of Africa is finding it easy to adapt to bitcoin quickly.
While central banks continue to warn that cryptos are not legal tender and investors are unprotected, this is not deterring the users and investors.
South Africa, Nigeria, and Kenya are the hotspots of bitcoin on the continent. In Nigeria, small crypto transfers total at about $56 million in June, which is nearly 50% more than a year before. The number of transactions also jumped over 55% to 120,000 in the country.
According to Chainalysis, which tracks crypto flows for financial firms and US law enforcement, monthly crypto transfers to and from Africa of under $10,000 has jumped over 55% in a year to reach $316 million in June. The number of monthly transfers also doubled, surpassing 600,700.
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Abolaji Odunjo, a mobile phone seller in Lagos, saw his profits boosted after he started paying his suppliers in bitcoin. His Chinese supplies, from whom he sources the handsets and accessories, ask to be paid in crypto for speed and convenience.
“Bitcoin helped to protect my business against the currency devaluation, and enabled me to grow at the same time,” Odunjo told Reuters. “You don’t have to pay charges, you don’t have to buy dollars,” said the 30-year-old.
Nigeria, the continent’s biggest economy, is oil-dependent whose local currency naira is devalued twice by the central bank this year amidst low crude prices and COVID-19.
Naira’s fall pushed Nigerians towards bitcoin as reflected in the volume of the Lagos exchange BuyCoins, which jumped more than three-fold to $21 million in June following naira’s devaluation in March.
Another exchange Yellow Card also saw its monthly crypto volume spiking five-fold in 2020 to $25 million last month. Bitcoin trading volumes in South Africa and Nigeria combined on Luno jumped by half to $536 million.
Bitcoin is booming in Africa, driven by remittances sent home from migrant workers and payments from small businesses.
“People are very adoptive of any technology that will make their life easier,” said Frankline Kihiu, a crypto broker in Kenya’s capital, Nairobi. “In most African countries, there are lots of government restrictions that bitcoin takes away.”