Crypto Africa

27 May 2020 by rate3

When it gets to analyzing the state of the crypto around the World medias primary focus our attention on two rivaling giants - USA and China - with the European Union in a distant third position. As to the rest of our planet - it hardly exists for the majority of 'crypto-experts'.

That's why when I stumbled on "The State of Crypto: Africa" 37-pages report freshly baked by 10-months old, Oslo-based research firm 'Arcane Research' I did not hesitate and committed myself to review it ASAP.

Here's what I've got:

Africa with its fast-growing (2.7%, or 142% above global average) population (1.27 billion, 17% of the world's total), almost all of which (97%) is below the age of 65 (median age is 18) presents itself a new frontier for many businesses, crypto including.

Extract: "The number of commercial banks per 100,000 adults is 61% lower across SubSaharan Africa (~4) than the global average (~12) and as of 2018, 66% of those living in Sub-Saharan Africa had no access to a traditional bank account. ... Last year, expats sent around $48 billion back to families in SubSaharan Africa according to the World Bank. ... Remittances below $200 to Sub-Saharan countries, cost an average of about 9% compared to the global average of 6.8% ... "

Extract: "Among the five most populous African counties, inflation over the past 10 years has typically ranged between 5-15% (spiking to ~30% in Egypt and Ethiopia) . ... Past 10 years South African Rand (ZAR), despite recent stability, has lost over 50% of its value against the US Dollar".

However, with Internet penetration less that 40% (compare to World average of about 60%) added by growing but still low smartphone usage (38% in Sub-Saharan compare to 59% globally) the barriers for entrepreneurs to surmount are also formidable:

Extract: "Across the Sub-Saharan region, an astonishing 57% (compare to 13% worldwide) of the population still lack access to electricity."

That is added by North African countries taking "the most hostile position" towards crypto with "Algeria, Libya, and Morocco have all issued bans against the use of cryptocurrencies, while Egypt’s religious legislator has passed a decree, prohibiting their usage." The bulk (60%) of 54 African countries are still ambivalent on the issue.

Not to mention that Africa is now counted as the most politically unstable region of the world with a number of country-to-country conflicts already exceeding 20.

As a result, "South Africa, Nigeria, Kenya, and Ghana account for the majority of demand, while the Ugandan and Zambian markets are growing consistently". Presently, the ownership of crypto-currencies in some of those locations is as the following (as a percentage of total population): Morocco (2%); Egypt (4%); Kenya (5%); Ghana (6%); Worldwide (7%); Nigeria (11%); South Africa (13%).

Moreover, only 0.2% of all Bitcoin nodes worldwide are located in Africa and same goes for ETH. BTC mining is non-existing. ATMs are nowhere to find and merchant adaption is close to zero. All we have left with are P2P transactions, which "now accounts for more than 14% of LocalBitcoins" and exchanges' trading with most activity focused in Nigeria, Kenya, and South Africa.

Consequently, almost all of the following, most popular native crypto-entities are localized in those few regions:

- AZA Group (subsidiary of BitPesa);

- Akoin (founded by Rap artist Akon also known for its ‘Akon Crypto City’ planned on 2000 acres in Senegal);

- The Sun Exchange (located in South Africa, is the world’s first peer-to-peer solar panel microleasing platform where customers lease solar cells purchased through the platform to end users);

- PayPlux (is the dominant actor on crypto-exchange market in Ghana);

- Quidax (since 2018 - major cryptocurrency exchange in Nigeria);

- VALR (since 2019 the biggest exchange venues in South Africa).

They are contested by several well-known names:

- Binance, which has opened a new subsidiary in Uganda, offering NGN trading and ZAR deposits;

- Huobi offering white-label service to SaBi exchange in Nigeria and the upcoming HIZA exchange in South Africa;

- Bitcoin Cash, which is accepted by 24 merchants in South Africa and Nigeria;

- Dash, which is accepted by 49 Nigerian merchants;

- and Electroneum which claims to have over 100,000 users in Nigeria, Uganda, and Tanzania.

Overall, African continent is, definitely, not a 'low-hanging-fruit' for crypto- entrepreneurs, which (fruit) can't be digested without some extensive doze of 'hopium'.

Extract: "Companies such as SpaceX, Amazon, Viasat, and OneWeb are building low orbit satellite mega-constellations that aim to provide high-speed internet across the globe, including to rural and remote regions."

Extract: "goTenna, allows users to transmit transactions without internet via its mesh network. Although goTenna’s network across Africa is relatively underdeveloped, Blockstream and goTenna have partnered, combining their satellite and mesh networks in a bid to increase access globally to the Bitcoin network."

Still, with most of G20 regulators adapt scorched-earth policy towards crypto while faced by their rapidly devaluing currencies, Africa might soon become 'the Crypto Alamo'.