Recently Twitter and Square CEO Jack Dorsey made a strong sentiment that Africa will determine the future (especially the Bitcoin one!). Were his views correct?
Sad to be leaving the continent…for now. Africa will define the future (especially the bitcoin one!). Not sure where yet, but I’ll be living here for 3-6 months mid 2020. Grateful I was able to experience a small part. 🌍 pic.twitter.com/9VqgbhCXWd
— jack (@jack) November 27, 2019
Early in 2020, a report titled The State of Crypto in Africa was published by cryptocurrency firm, Luno, which is based in London. The research was an attempt by the firm to understand where the future of digital currencies in Africa is headed.
Crypto in Africa surging
Although Africa is a highly diverse continent, African countries commonly share essential similarities such as socioeconomic issues and a substantial lack of infrastructure. Today, the use of digital currencies worldwide is primarily focused around investments, trading, and speculations. However, this fact is not particularly actual across the African continent, where the use cases of cryptocurrencies and the extent of difficulties it could solve differs far more.
Due to this fact, Africa is the best rearing ground for cryptocurrency. Notably, the report outlines that:
“Africa is one of, if not the most promising region for the adoption of cryptocurrencies. This is due to its unique combination of economic and demographic trends. While the overall adoption is relatively low, the potential is enormous, the growth is rapid, and the development is likely to become defining for the cryptocurrency industry going forward.”
Nevertheless, there is a dichotomy in the adoption of digital currency adoption in the continent. On the one hand, crypto research experts have uncovered that there are colossal ownership ratios in specific countries. According to Google trends statistics, Nigeria, South Africa, Kenya, Uganda, and Ghana are all in the top ten in the subject of cryptocurrencies, which is an indication of the surging interest.
Insignificant mining activities despite growing cryptocurrency use
In fact, according to a recent study on crypto ownership, South Africa is number three globally, with 13 percent, followed by Nigeria at 5th with 11 percent. Regardless of the growing ownership, the continent is lagging way behind in infrastructures. There is still an apparent deficiency of nodes, mining operations, and supported merchants. Indeed, Africa harbors just 20 of the 10,267 Bitcoin nodes all over the world. Moreover, a study by CoinShares suggests that there are almost insignificant BTC mining operations across the continent.
The biggest challenge facing cryptocurrencies in Africa is the negative measures from legislators and the authorities. The legitimacy of BTC and other cryptocurrencies varies massively across the continent, with more than 60 percent of governments yet to clarify their stance. Notably, North African nations have taken the most aggressive position against cryptocurrency use. Algeria, Morocco, and Libya have all prohibited cryptocurrency use .