For the world’s cryptocurrency industry, 2021 is likely to be one of the many times bitcoin broke through its all-time high price and moved the industry closer to mainstream adoption. However, from a regional point of view, it may have been the year that Africa took the spotlight.
A report says that there has been a 1,200% rise in the use of crypto, the launch of Africa’s first central bank digital currency, and a Central Bank of Nigeria circular on cryptocurrencies. It’s hard to avoid talking about these things without talking about what’s going on in Africa.
This year, Luno’s General Manager for Africa talks about three big trends that you can expect to see in Africa:
To say that the regulation of the crypto sector in Africa will be interesting in 2021 would be an understatement. When it comes to consumer protection, Europe’s major economies took a much more proactive stance last year, with one strategy in particular drawing attention: blanket bans. For countries that took these steps, the results haven’t been great. Trading has been forced underground, and regulators have had less information about the sector.
Because of that, regulators may be more willing to work with businesses to build a more robust and effective framework. This could encourage other African countries to do the same. As we’ve seen in China, blanket bans don’t work very well at limiting trading and protecting consumers. Read also: Bitcoin Future in 2022 Is Uncertain Following Record Year Instead, experts who know how new and complicated technology like cryptocurrencies work can be a huge help in figuring out how to protect people from its risks.
The news about Nigeria’s ban on crypto was going to be big in 2021, but Kenya’s P2P trading volume was probably not as well-known as it should have been. Because of its young population, high levels of mobile connectivity, and familiarity with digital payment methods like mobile money, East Africa is set to become the region’s top crypto hub by 2022.
However, in order for mainstream adoption of crypto to move forward, crypto education must be spread across the country. Luno’s 2021 survey found that 64 percent of Kenyans don’t invest in cryptocurrencies because they don’t understand them. Because Kenyans are the most likely to seek out financial advice from traditional sources (such as financial services companies, publications, and advisors) before making investment decisions, crypto firms need to go the extra mile to make sure the right information is available.
A new way to deal with Africa’s problem with remittances
It’s not a secret that people in Africa are most likely to use cryptocurrencies to make investments. However, this year, remittances could see a big boost because of this. According to the World Bank, total remittances in Sub-Saharan Africa alone will top $45 billion in 2021. However, many businesses in Africa don’t have enough foreign currency to accept international payments and send their profits back home, so they may look to cryptocurrencies as an alternative way to handle cross-border transactions. Read more: Everything You Need to Know About NFTs
Cryptocurrencies have a big advantage in this area because of the open and decentralized blockchain networks that support them. These networks make it easy for money to move between parties quickly and without a lot of lag time or high fees, no matter who or where they are. Progress in this area of the crypto industry will be very dependent on a favorable regulatory environment, and if this happens, cryptocurrencies could become a big asset for companies with a lot of business in Africa.
Expect the unexpected
In spite of how important the three categories above will be in 2015, they are not the only trends to keep an eye on. For example, getting institutional investors to invest in Africa’s crypto space is still a big problem. However, we could see more mature markets like South Africa set up stronger regulatory frameworks to encourage more involvement from these groups.
It’s also becoming more popular, which means that it’s attracting world-class talent and getting more attention from the best media outlets. Both of these trends should keep going. However, if we’ve learned anything from the last two years, we should also be ready for the unexpected. Even though this can cause a lot of uncertainty, a quick look at Africa’s current and future position and prospects should still give us a lot of hope that it will be the best place to use cryptocurrencies.