Crypto, blockchain and the wonderful world of Web3. Whatever you want to call it, it’s an emerging technology that is seeing rapid adoption all over the world, but if there’s one place where we can say it definitely has a future, it has to be Africa.

Africa’s appetite for blockchain is evident no matter where one looks. Not only is it a place where people have embraced the use of cryptocurrencies, it’s also home to a growing startup scene. In 2022, funding for African startups increased by an impressive five-times compared to the previous year, according to the latest CV VC Report.

All told, African blockchain startups raised $474 million in 2022, up 429% from the year before. It also saw its first two crypto unicorns emerge in KuCoin and Scoll, the same report found. The cryptocurrency exchange KuCoin was Africa’s biggest beneficiary, raising a cool $160 million, while Scroll.io, an Ethereum Layer-2 scaling solution, raised a bumper $30 million in its own funding round.

It’s also widely known that African countries have emerged as some of the friendliest places to transact with cryptocurrencies. Ownership of crypto has exploded across the continent. A report from Chainalysis in September 2022 noted that crypto is now thriving in Sub-Saharan Africa, especially in matters such as small retail payments. The region accounts for an incredible 80% of all crypto retail payments under $1,000 in value. The same report showed that peer-to-peer transactions have become more commonplace in Africa than any other region of the world, accounting for approximately 6% of all crypto transaction volume in the last year, dwarfing even Central and Southern Asia, which had the second-highest P2P transaction volume.

Chainalysis stated that crypto usage in Africa is driven primarily by necessity, rather than the speculation that has fueled its adoption in Western nations.

So why is crypto a necessity in Africa?

A look at the macroeconomic picture across Africa shows us exactly why crypto is being deemed so essential by a growing number of the continent’s inhabitants. In Nigeria, Africa’s largest economy, the local currency the naira has seen its value depreciate by a staggering 70% over the last eight years.

Added to the depreciating value of local currencies is Africa’s extremely high rate of inflation. There are also problems with Africa’s underdeveloped financial infrastructure, which simply doesn’t cater to the majority of its population. Banking in Africa is slow and expensive and inaccessible to most people, with more than 60% of its population reported to be unbanked. What’s more, it’s isolated from international banking to a substantial extent, with the World Bank saying that payments to African banks cost an average of 10% in fees, the highest in the world.

On the other hand, Africa enjoys some advantages, especially its youthful population. It’s said that 70% of all Africans are under 30 years old, and it is home to a booming technology scene. Last year, the technology sector outpaced Nigeria’s oil industry for the first time in terms of its GDP contribution. In other words, Africa is the perfect environment for the adoption of new technologies, especially fintech.