In the wake of the COVID-19 pandemic, citizens in the African continent turned to cryptocurrencies to mitigate the economic consequences in their countries. Bitcoin, Ethereum, Dogecoin, and others in the top ten by market cap became a necessary tool of survival for many in the region.
These digital assets enable people to freely transact, send and receive remittances, and obtain access to a new form of digital investment. That’s how a large portion of Africa stayed afloat during 2020 and 2021.
The Land Of Bitcoin?, How Africa Will Host The Future Of Crypto
Named one of the most relevant regions in the world in terms of potential, according to a report published by Arcane Research in collaboration with crypto exchange Luno, Africa certainly has a series of attributes that facilitate adoption. Unlike Europe and the United States, its population is younger and in need of innovations in the financial sector.
The CEO of Twitter and Square, Jack Dorsey, has been known for his pro-Bitcoin stance. The executive has deep tights with Africa and believes this continent will “define the future (especially the bitcoin one!)”. The same has been stated by other prominent names within and outside the crypto industry.
In the region, a large number of people transact outside the traditional financial system and banking institutions. Thus, why have so many learned how to use Bitcoin and cryptocurrencies for their benefit. Crypto helps them circumvent their limitations, and provides them with tools to make payments, and invest.
High economic and financial incentives allowed for crypto and its underlying technology to penetrate deep into the African region. In that sense, Sergey Ordin, Marketing Director of the international crypto community Roy Club, believes Africans have “advanced” knowledge on digital services and an incredible capacity to master innovative technologies. Ordin said:
They have remarkably high interest toward innovative financial opportunities with low entry levels, especially among young generations that are looking for ways to financial independence
The Roy Club is an organization that has managed to attract many users from the region in 2021. The number of local participants reached a staggering 100,000 (around 15% of the world’s participation). The organization has an estimated 700,000 total members.
In Search Of Financial Freedom
One of the most popular use cases for cryptocurrencies is remittances. Their fast and low-cost transactions allowed people in Africa and in other places to send money to friends and family. Amidst the pandemic, this use case became vital.
The World Bank suggested that the region is one of the most expensive continents on earth to transfer money. In order to conduct a transaction, a user needs to pay about 8.9% in fees. The same operation would cost significantly less in America or Europe.
As the COVID-19 pandemic caused chaos in the financial world, Africans began to used Bitcoin, and cryptocurrencies as investment products. Cut out from the rest of the world, with high fees to send money around, and with an increase in unemployment, putting money into digital assets saved thousands from losing money. Crypto allowed people in this part of the world to produce yield from their investment.
Data from Coingecko shows that BTC records a 330% profit in one year. In many cases, the first cryptocurrency by market cap has been outperformed by alternatives. In other words, crypto investors in Africa were capable of outperforming those with assets in traditional finances, cementing their financial freedom. Nena Nwachukwu, regional manager for Paxful based in Nigeria, said:
With devaluation and recession causing Naira depreciation, individuals and even businesses are looking to hedge the value of their funds using a good investment tool.
Around mid-2021, Bitcoin and the crypto market peaked. BTC’s price recorded an all-time high of $64,000, Ethereum (ETH) of about $4,500. Then, months of downside price action forced crypto investors to look for new mechanisms to generate returns.
Proof-of-Stake (PoS) blockchains were a popular solution. Unlike Bitcoin’s Proof-Of-Work (PoW) based blockchain, PoS networks are more accessible. Users can participate to help secure the blockchain, validate transactions, and obtain staking rewards just by holding a certain amount of a token. In that sense, only someone requires access to a wallet.
The Roy Club has stood out from other crypto communities because it offers its members access to educational resources on cryptocurrencies, and opportunities in this market. In addition, the organization offers a staking pool-based mechanism that provides members with an efficient and accessible way to maximize their profits.
Its marketing director Sergey Ordin claimed that African crypto investors have a major interest in their model. Via decentralized staking pools, a user could see between a 5% to 40% increase on their UMI token, depending on the pool they participate in.
Support, financial inclusion, profit, a community, and opportunities, all these factors showed why The Roy Club has gained popularity in the region and why Africa will continue to lead in crypto adoption. The CEO of Africa exchange Quidax, Buchi Okoro, knows firsthand what has driven the boom of crypto activity in the region. Okoro said:
From our conversations with our customers, we have a lot of people using crypto to earn a living.