No estimated figure is put to it but the latest Chainalysis 2020 Geography of Cryptocurrency Report suggests that a significant volume of cryptocurrency transactions is now being conducted between Africans and individuals and businesses in other regions — particularly China in Eastern Asia.

Due to many African countries suffering from currency devaluation and instability which makes it difficult for their citizens’ savings to hold value, and Africans having to go through some hurdles to access foreign exchange, they now opt for cryptocurrencies like Bitcoin to transact their businesses. 

“In one instance, a user ran a business importing video games from China to sell in Nigeria,” the report cites its interview with Ray Youssef of Paxful. “His bank wouldn’t let him wire money to China, so historically he had to get U.S. dollars on the black market and somehow get it to China, usually via Hong Kong. But with cryptocurrency, he can sell bitcoin to receive CNY in any major Chinese digital wallet and send it directly to his counterparty in China.” 

For Dovey Wan, a venture fund founder and cryptocurrency expert based in China, the high volume of cryptocurrency being transferred between Africa and East Asia is as a result, in many cases, of Chinese nationals accounting for both sides of the transactions. 

“Lots of Chinese merchants are living in Africa for business, and use cryptocurrency to send funds home,” she is quoted to have said, citing that some of the Chinese even run mining rigs in Africa as hydropower is cheap in many parts of the continent. For others, she added, they may be inclined to use cryptocurrencies in sending money to China instead of going through banks because they are working on business ventures that aren’t entirely legal such as dealing in the illicit diamond trade.

Regardless, the report notes that Africa’s on-chain cryptocurrency activity has grown to be one of the ten largest services in the region by volume with its engagement share rising from 67% in October 2019 to 78% according to present assessment. Binance stands out to be a main beneficiary of most of the activity from Africa, it adds, as the world’s largest cryptocurrency exchange by volume has seen its activity in Africa risen sharply since the beginning of 2020. 

“When Binance came to Nigeria, it afforded the opportunity to many to buy and trade,” says Adedeji Owonibi, a senior partner at the Nigeria-based blockchain forensics consultancy A&D Forensics and expert in cryptocurrency activity. “They have more liquidity than other exchanges within the region, recruit local community managers from the cryptocurrency communities in the region, and they provide free rewards to get new people to sign up.”  These add to Binance’s aggressive marketing strategy in Africa which Owonibi said focuses heavily on educating novices on how to use cryptocurrency.

Chainalysis maintains that East Asia is the world’s largest cryptocurrency market, accounting for 31% of all cryptocurrency transacted in the last 12 months with wallet addresses from the region having received $107 bln worth of cryptocurrency within the period – 77% more than Northern & Western Europe (NWE), the second-highest receiving region. 

44% of transactions by volume involving an East Asia-based address are also said to be counter-partied with another East Asia-based address compared to just 22% for NWE. The liquidity and large trading population of the region’s market makes it a key trading partner for other regions’ cryptocurrency economies, the report notes adding that East Asia is either the largest or second-largest counterparty for every other region studied.