It is clearly visible that Africa’s crypto economy is rapidly growing. It was with the aim of pouring more light on this aspect that Chainanalysis released the 2020 Geography of Cryptocurrency Report. The report clearly indicated that remittances and fiat devaluation are responsible for this rapid growth in the crypto economy of Africa.
It is without doubt that Africa has the smallest cryptocurrency economy of any region analyzed in the 2020 Geography of Cryptocurrency by Chainanalysis, with as little as $8.0 billion worth having been received and $8.1 billion sent on-chain in the last year. However, the relatively small amount of activity is significantly creating life-changing value for users in the region facing economic instability, offering low fee remittances and an alternative way to save.
As it is the case with Latin America and other regions in the developing world, overseas remittances are a crucial part of the economy for many parts of Africa. According to the results of a research that was carried out by the Pew Research Center in 2018, the 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 as compared to the worldwide average of 17%. The roughly 25 million expats of Sub-Saharan African countries living overseas remitted $48 billion in fiat back to the region in 2019.
The chart above clearly indicates that many are turning to cryptocurrency to send funds back to the region as well. It is thought that the demand for low-fee remittances and the instability of some African currencies are the main reasons why Africans are turning to digital currencies. About $562 million worth of cryptocurrency was transferred directly from overseas addresses to ones based in Africa in retail size payments. Despite the fact that it is highly unlikely that all of this represents remittances from expats, most regions with high concentrations of African migrants, such as North America, East Asia, and Western Europe are well represented.
In addition, small value transfers under $10,000 rose by 55% to $316 million in the year to June. According to the report, these transfers contribute to the largest share of Africa’s crypto activity. Note that the African countries leading in cryptocurrency transfers are South Africa, Nigeria, and Kenya.