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Cryptocurrency activity in Africa has consolidated over the past year, with “a large part of this business” going to Binance, according to Chainalysis, the blockchain analysis specialist.
The share of the top ten cryptos services in the continent’s overall activity has increased from 66% in October 2019 to 78% this summer, as Chainalysis reported in a recent article. Binance’s share of Africa’s crypto business “has increased sharply since the beginning of 2020”.
The liquidity and variety of trading pairs offered by leading exchanges such as Binance are likely attractive to the growing professional market (which we define as those who make transfers of over $10,000 in cryptocurrencies).
Similar to Latin America and other regions in the developing world, overseas remittances are a crucial part of the economy for many parts of Africa. A 2018 study from the Pew Research Center found that Sub-Saharan Africa accounts for eight of the ten countries with the fastest-growing international migrant populations since 2010, growing by 50% between 2010 and 2017 compared to the worldwide average of 17%. The roughly 25 million expats of Sub-Saharan African countries living abroad remitted $48 billion in fiat back to the region in 2019.
The following graph also seems to confirm this claim, given that “increases in professional activity coincide with increases in the volume of African transactions on Binance.
In a YouTube Ask Me Anything session, Changpeng Zhao, CEO of Binance, attributed this growth to the exchange’s ability to establish relationships with local banks, which in turn allows users to switch from cash to cryptocurrencies.
Chainalysis attributes the increase in cryptos transactions to the devaluation of African countries’ currency and remittances. Effort Onoboh, an independent Nigerian trader and investor, told Cryptonews.com that tightening regulations “coupled with the continued devaluation of the Naira has made cryptos a viable option for all”.
Reuters recently reported a “quiet Bitcoin boom in Africa” due to small businesses on the one hand, and remittances from migrant workers to their home countries on the other, all thanks to young, technologically savvy and adaptable populations. Bitcoin (BTC) users surveyed in five countries said that crypto made their businesses more profitable.
As reported yesterday, Ukraine, Russia and Venezuela took three of the top places in the Global Crypto Adoption Index, announced by Chainalysis. Kenya, South Africa and Nigeria ranked 5th, 7th and 8th respectively.