Unveiled on January 11, the latest cryptocurrency adoption index from Australian company Finder confirms the increased popularity of digital currencies on the continent. Based on a survey concluded at the end of December 2021 among internet users around the world, the index aims to determine the rate of adoption to cryptocurrencies in 27 countries, including South Africa. The Rainbow Nation ranks 21st with an overall cryptocurrency ownership rate of 11.3% among the 2003 South African internet users surveyed. A figure that places South Africa far behind Vietnam, world champion in this field (28.6%) but well ahead of Japan (5.8%), which closes the list.
According to the data collected, bitcoin would be the most popular crypto-currency held, with 56% of digital currency owners in the southern African country indicating that they held it at the end of December 2021, ahead of Ethereum (31.51%), Ripple (25.8%) and Dogecoin (15.6%). The other points highlighted by the Finder Index include the male overrepresentation among South African digital currency holders (62% of cryptocurrency owners) and the relative youth of the latter, with 56.1% of cryptocurrency user respondents being 18-34 year olds, while 35-54 year olds hold 32% and over 55 year olds 19.3%.
Finally, in addition to being overwhelmingly young men, South African digital currency holders also appear relatively optimistic about the financial future of cryptocurrencies, with 47% of those surveyed believing that these digital assets are a good investment option. A figure that is higher than the global average of 43%, established by Finder's Cryptocurrency Adoption Index.
Africa, the next frontier for cryptocurrencies
This growing popularity of digital currencies isn't just for the Rainbow Nation. Another recent index dedicated to cryptocurrencies, the Global Crypto Adoption Index from analytics firm Chainalysis, estimates that between July 2020 and June 2021, the African cryptocurrency market would have jumped by.... 1200%! This is a dizzying progression, which represents a total value of 105.6 billion dollars of digital assets, and which seems to accredit the idea that Africa would be the next frontier of digital currencies. Indeed, digital currencies are emerging as an alternative for those excluded from traditional banking services. Especially since their use often requires only a smartphone - already popular with payment applications such as M-Pesa (48 million users at the end of March 2021) - to access the blockchain networks. In detail, no less than six African countries appear in the Top 20 of the Global Crypto Adoption Index, with Kenya being the best ranked (5th), followed by Nigeria (6th), Togo (9th), South Africa (16th), Ghana (17th) and Tanzania (19th).
Africa leads peer-to-peer (P2P) payment platforms in terms of transaction volume
Similarly, "no region uses P2P platforms at a higher rate than African cryptocurrency users, accounting for 1.2% of all African transaction volume and 2.6% of all volume for bitcoin specifically," Chainalysis teams say before noting that "many African cryptocurrency users rely on P2P platforms not only as an on-ramp to cryptocurrencies, but also for remittances and even commercial transactions." Moreover, "inter-regional transfers account for a larger share of the cryptocurrency market in Africa than in any other region, with 96 percent of total transaction volume, compared to 78 percent for all regions combined," Chainalysis experts continue.
Nevertheless, financial regulators in most African countries remain hostile to cryptocurrency trading, with the Central Bank of Nigeria, for example, having banned the use and holding of cryptocurrencies as of 2017. This defiance of public authorities undoubtedly hinders many potential international investors, interested in the African market. Jack Dorsey, the founder of Twitter and Square, for example, had not hidden his appetite for the African market during his tour of the continent in 2019. Since then, his ambitions have been scaled back, even as mobile payments specialist Square generated $2.72 billion in bitcoin revenue in Q2 2021 alone.
African fintech companies associated with cryptocurrencies are nonetheless continuing to grow, particularly in Nigeria. Last March, digital payments platform Flutterwave completed a $170 million fundraising round, valuing the company at over $1 billion. A few weeks later, the startup made TIME magazine's prestigious list of the 100 most influential companies in the world.