High inflation rates, volatile currencies, and lack of banking infrastructure, combined with a growing, young, and mobile-native population make Africa ideal for the rapid adoption of cryptocurrencies, a recent study by global cryptocurrency platform Luno says.
Titled The State of Crypto: Africa, the report was made in collaboration with Arcane Research, part of the Oslo-based Arcane Crypto. It explores the opportunity presented by cryptocurrencies in Africa and highlights the potential for cryptocurrencies to thrive as a result of the economic landscape and demographic trends of the continent.
“Africa is one of, if not the most promising region for the adoption of cryptocurrencies due to its unique combination of economic and demographic trends,” the report reads. Although diverse, African nations share key similarities and trends – economic problems, from high inflation rates and volatile currencies to financial issues such as capital controls and a lack of banking infrastructure.
All of these challenges create “a fertile ground for an alternative to germinate” with cryptocurrencies positioned to become the ideal antidote to many of the financial challenges in Africa, Luno’s General Manager for Africa Marius Reitz said, adding that Africa has a need for the utility of cryptocurrencies more than any other continent.
But to realize the potential of cryptocurrency in the region, there are some major challenges that are still to be overcome, the report adds. These include a “significant lack of the typical infrastructure” seen elsewhere such as nodes, mining operations, supporting merchants, ATMs, and exchanges.
“There is clearly a lot of work to be done, especially with crypto-specific infrastructure, but this also presents a huge opportunity to deliver the much-needed transformation of financial systems across many countries on the continent,” Reitz added.
There’s also inadequate internet coverage, competition from mobile money services, and hostility from national governments – the legality of crypto assets varies significantly across the region with over 60 percent of African governments yet to clarify their position. This uncertainty, while not an absolute barrier, is a drag on the speed of adoption.
“While the overall adoption (of cryptocurrencies in Africa) 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,” the report says.
Along with the report, Luno is also set to unveil a new documentary – Banking on Africa: The Bitcoin Revolution – that follows the journey of some of Africa’s Bitcoin pioneers. The documentary, which will be available on Amazon Prime on Friday, May 22 , is a 45-minute video featuring key crypto personalities based in Southern Africa.