Factors hindering widespread crypto and blockchain technology adotption in Africa.

Let's consider some of the reasons for Africa's low percentage in Blockchain development.

Crypto adoption implies that assets like Bitcoin, Ethereum, USDT will be used and accepted as legal tender on the Africa continent.

The development and growth of crypto in Africa has been eye catching for the past 3 years.

According to Chainalysis, between the years 2020 and 2021, the African cryptocurrency market grew by over 1200%. The report ranked Kenya, Nigeria, South Africa, and Tanzania amongst the top 20 cryptocurrency adoption nations worldwide. Cryptocurrencies continue to grow in popularity all over the continent as more businesses adopt them. This is due to their many benefits, including security and transparency. They also have the potential to revolutionise many industries, including finance, gaming, entertainment and real estate. With all this use case, Africa is still lagging behind with only 4 percent of the global value of all cryptocurrencies and this is attributed to a range of factors. Involving;

✓Lack of Awareness.

There’s a lack of a proper education system for people to learn about cryptocurrencies, how it works and why they should use it.

The public generally knows very little about the technology.

There is a lot of confusion and lack of understanding about blockchain, which could lead to hesitancy to adopt something along those new technological lines. Blockchain being an emerging technology there are a handful of individuals who understand it, who can execute it or put it into practice. The skills element might also be a problem in adoption.

✓ Absence of legal and regulatory framework.

The regulatory environment does not adequately cater for, or focus on blockchain technology and the scope in which it can be used. Only a few countries have taken a step to develop a regulatory plan. This lack of a consumer protection plan by African governments has created room for many bad actors to take advantage of people in the crypto space with scam and rugpull blockchain projects. There is still a lack of incentives to the masses by the government to abandon the old system that has existed for decades.

✓ Security concern.

Being a digital technology, crypto currency and blockchain technology is prone to cybersecurity breaches. According to chainanalysis, $3.8 in crypto was lost in business hacking in 2022. This number can do nothing but scaring new entrants in the sector.

In addition, the use of anonymous cryptocurrency wallets can make it difficult to trace the source of funds if something goes wrong.

✓ Price volatility and lack of inherent value.

Prices for crypto assets like Bitcoin are highly volatile and unpredictable, making it a risky investment for those unfamiliar with the technology. Even experienced traders can struggle to make profits from these price fluctuations. This swing in prices has discouraged many from joining the technology.

Crypto scams

Crypto scams and crypto malware are another reason why adoption is discouraged in Africa. The lack of regulation and education about cryptocurrencies has resulted in high levels of fraud and scams in the African cryptocurrency space. Many people have been taken advantage of by scam artists who promise them high returns on their investments. This leaves people struggling to get their money back, which dissuades others from participating in the cryptocurrency market.

✓ Technical complexity.

The technology stack behind cryptocurrency and blockchain is hard to be understood by a common person who did not go to school. Given that this group takes up a larger percentage of Africa’s both urban and rural population then it will be hard for the technology to get adopted to the expected rate. This group has a great fear for change limiting their desire to switch from the traditional systems to try out new technologies.

✓ Fear for Layoffs.

If blockchain is adopted, many traditional companies in the finance and payment sector will be eliminated from the industry, and people who work in those companies will lose their jobs. This includes banks, remittance companies, and payments companies. It’s for this reason that traditional companies like banks, MNOs are on the front of fighting blockchain adoptions. Banks have a higher tendency of declining crypto purchase transactions referring to them as scam. However, P2P platforms have reduced this syndicate by banks hence driving more crypto adoption on the continent.

Despite the presence of factors hindering crypto adoption, here are some of the reasons for the widespread adoption of crypto in Africa.

✓ Purchasing Power of fiat currencies.

Many Africans are interested in cryptocurrencies because it is believed that they have greater potential than traditional currencies. Many African countries have weak economies and high inflation rates. Cryptocurrencies offer a way for Africans to protect their money from devaluation.

For example, Bitcoin has grown in value by more than 1,000% since it was first introduced in 2009. Many people would instead save in crypto than their local currency despite the volatility of crypto.

✓ A large percentage of young people.

According to Wikipedia, 60% of Africa’s population is under 25, and cryptocurrencies are becoming more popular with young people. This is likely due to their potential for financial independence and the ability to avoid government regulation. Many young people see cryptocurrencies as a way to escape the traditional banking system and its limitations. They also see them as a way to make transactions without worrying about the middleman.

✓ P2P trading

Chainanalysis shows that Africa has the highest P2P crypto trading platform users. The ban on crypto in some countries has also fueled this increase.

Remittances also play a significant role in crypto adoption in Africa. People in the diaspora can send money home and vice versa through cryptocurrency.

Africa is one of the regions where cryptocurrencies are not well-accepted. Nevertheless, crypto use has increased in the region. This is likely because crypto is viewed as a way to escape from the economic instability that affects many countries in Africa. Cryptocurrencies also offer an alternative investment opportunity that any government or institution does not control.

✓ Growing Internet Access.

In Africa, internet access is rapidly increasing, which makes it easier for people to learn about cryptocurrencies and access trading platforms. With the internet and a smartphone, you can access crypto trading platforms and mobile wallets, a set of things you need to get started with crypto trading and access.

✓ Mobile Money.

Mobile money is widely used in Africa, and this technology can be used to easily purchase and trade cryptocurrencies. This is the most commonly used payment method for P2P, on ramp and off ramp transactions.

✓ Increased awareness.

Cryptocurrency awareness is growing in Africa, and this is helping to drive adoption. Major players in the region provide educational blogs to benefit newbies and experts. At Paychant for example, under our blog section on the website, there are a number of resources to help Africans understand crypto and blockchain technology.

✓ Low Cost of Transactions.

Compared to traditional banking, cryptocurrencies offer significantly lower fees, making them attractive to African users. It only requires a few cents to $1 to make both local and international crypto transfers or make crypto payments which is way cheaper compared to the traditional banking systems which charge over 5% in fees.

Conclusion.

Although crypto adoption in Africa is subjected to a number of challenges, the positive factors still stand out and this creates a favorable environment for the masses to adopt the technology. The industry registers new users year after year which is enough to come to conclusion that the sector's future is bright.