Will Africa and South America Be the Next Realm of Bitcoin Mania?
Recently, an interactive map about the global interest in cryptocurrencies shows that bitcoin search is mainly concentrated on African and South American countries as bitcoin accounts for 94.7% of cryptocurrency-related searches in Kenya, while Nigeria and South Africa account for 89.4% and 89%, respectively.
This search trend shows that African countries may become key crypto players in the future. Previous reports showed that in July 2019, the speaker of Nigeria’s House of Representatives called for the establishment of a substantive legal framework for cryptocurrencies.
The reason why bitcoin is particularly welcomed in Africa and South America has a lot to do with the population structure, economy, politics and fiat money of the two countries.
Because of Africa’s explosive population growth, the median age in Africa is only 18 years old. Young people are more likely to accept new things. Judging from China’s situation, most of the current crypto space is the post-90s young people. So, it’s not surprising that Africa and South America, including Asia, have high acceptance of the Bitcoins.
Nigeria’s economy has returned to growth in the past two years, but inflation has also been rising since last summer, reaching an annual rate of almost 12% in December 2019.
At present, the largest denomination of paper money in Zimbabwe is 100 trillion, which equals to only 2.5 Chinese yuan. Moreover, the Zimbabwean currency has long been withdrawn from the currency exchange market, and the international does not recognize this exaggerated currency. Now the US dollar, South African rand, Botswana PRA, pound sterling, euro, Australian dollar, Japanese yen, and India rupee have become Zimbabwe’s fiat tender.
Due to the backward economy, unstable political situation and serious inflation of these two continents, holding domestic fiat money mean a substantial depreciation of purchasing power, while other investment means, such as foreign exchange, gold and other means of risk aversion, have a high threshold of entry, which is difficult to obtain through traditional financial channels.
As a result, these countries have also shown a growing interest in cryptocurrencies. At the same time, more and more people use cryptocurrency to solve financial needs, such as using cryptocurrency to transfer goods, services, and funds.
According to the 2019 global digital yearbook by Hootsuite, a social media management company, and Wearesocial, a global institution, the number of users with cryptocurrencies in sub-Saharan African countries such as Ghana and Kenya has reached the top 45 in the world, and a large number of people in these countries hold cryptocurrencies such as bitcoin.
A report estimated that 11% of Nigerian and 13% of South African Internet users under the age of 64 have cryptocurrency, compared with a global average of 7%. In South America, for example, since January 2018, the weekly transaction volume of bitcoin purchased with Argentine Peso has increased by 1028%. According to CoinDance, since 2018, Venezuela’s bitcoin trading volume of local bitcoins has been second only to Russia, comparable to the United States. Most of the time the trading volume in Nigeria is similar to that in China, Britain and Europe.
From the perspective of the sharp devaluation of population, economy, politics and sovereign currencies on these two continents, the function of bitcoin and cryptocurrency in its value storage, as well as the advantages of borderless payment, can meet the needs of local investment and financial services.
The two continents have a large population, about 1 billion people, accounting for 14% of the world’s population. If demand is fully stimulated due to the above reasons, they will become a hotbed of cryptocurrency.