A new study has revealed growth in the ownership of cryptocurrency in Africa, an indicator that the continent may be ripe for the adoption of digital currencies.
The Global Digital Report 2019 by Hootsuite, ranks South Africa as the world’s top nation for ownership of digital currencies, with 10 percent of internet users in the country holding a financial interest in cryptocurrency. While the global average is only five percent.
According to the CEO of Modulus, Richard Gardner, this is the second indicator in the past few weeks which shows Africa is ready for a transition towards digital currencies, and the continent may serve as a leader in terms of early adoption. Earlier this month, crypto exchange, Paxful revealed significant transaction volume growth within the continent.
“This new survey is the latest evidence that Africans are adopting this emerging technology at a rapid rate. There are geopolitical factors at play that combine to make the continent an ideal petri dish for innovation within the industry,” he noted.
Also ranked among the top 45 nations in the survey are Ghana and Kenya, with responses gathered from internet users between ages 16-64 years.
Why Africans are going ‘crypto’
Gardner further explained that cryptocurrencies are appealing despite the industry having a volatility of its own. This is because fiat currencies throughout Africa have long been weak on the international market with the South African Rand, Zimbabwean Dollar, among others struggling against alternative currencies.
And then there is the volatility found within monetary systems which have crippled the economies of emerging markets. Thus, many investors in Africa have looked to digital assets as a way to guard against inflation.
“There is significant talent within Africa, especially in the technology sector. Adoption of digital currencies may have been jump-started by circumstance, but anybody counting Africa out from the tech race is premature,” Gardner added.
Challenges of adoption
Despite the growth in ownership of crypto in Africa, there are numerous challenges facing the broad adoption of digital currencies in the continent.
One of the problems with using digital currencies is insecurity, they can be expensive and too complex to use especially for individuals with little or no digital literacy. Also, African economies are faced with limited infrastructure access and inadequate regulation leading to fraudulent activity on the online space.
Digital currencies offer solutions that require significant changes or complete replacement of existing systems. In order to make this change, not only financial institutions but the entire ecosystem needs to get prepared for the transition.
“Yes, there are a host of challenges that economies throughout the continent face, including access to infrastructure. But, as they say, necessity is the mother of innovation. As the world realizes that the technology behind cryptocurrencies is here to stay, Africa may be a prime position to attract speciality start-ups. Obviously, such an injection into a community and economy would have far-reaching ripples,” Gardner said.
Although it is hard to expect wide cryptocurrency adoption in a continent where a significant percentage of the population do not have bank accounts, several indications show that cryptocurrencies will survive in Africa.