2020 was a landmark year for Bitcoin. To assist our readers remember this year, we asked our authors to reflect on Bitcoin’s price, technical advancements, community expansion, and more in 2020, and what this could signify for 2021.
These authors replied with a meaningful set of pieces. Click here to read our whole End Of Year 2020 Series.
In 2014, Africa began to embrace bitcoin and other cryptocurrencies. Then came Bitcoin exchanges and transactions, lead by Nigeria. Since then, the number of Bitcoin users and transactions has increased.
Never before has Bitcoin been used so widely in Africa. Bitcoin has prospered in Africa, with 2020 being a breakthrough year. But where did Africa come from, and where will it go in 2021 and beyond, in terms of Bitcoin use and adoption?
African Governments React To Bitcoin
In terms of technology, Africa hasn’t been a global leader. Africa has always been sluggish to evolve and absorb new technology. Once adopted, however, it tends to outpace use in other climates.
But African governments have often been resistant to new technology. They typically leave the ecosystem development for these emerging technologies to the population.
This is the narrative of Bitcoin and cryptocurrencies in Africa, where governments have been sluggish to grasp or use distributed ledger technology. Some African countries do really distrust emerging technology. So it is with Bitcoin.
The African countries also employ a similar strategy in forex trading, which is only regulated in South Africa by the Financial Sector Conduct Authority (FSCA) and recently in Kenya by the Capital Markets Authority (CMA). Despite its ongoing expansion in all African nations, no other African country has showed any interest in regulating this activity.
Many central banks have warned against utilizing bitcoin and other cryptocurrencies, even when no explicit laws or regulations prohibit their usage. Or maybe it’s just fate; the African population is now pushing the decentralized adoption of bitcoin and other blockchain-based businesses.
In Africa, what Drives Bitcoin Adoption?
Bitcoin is widely used throughout the continent to power transactions outside the conventional banking system. African banking rules tend to be elite, rigid, and prevent widespread involvement. The enormous unbanked populations in many African nations have fueled the rise of mobile payment systems and various fintech applications aimed towards financial inclusion
Access to foreign currencies for commerce and international transactions has further boosted Bitcoin adoption. In nations like Nigeria and South Africa, where banks are restricted from moving foreign currency, traders are turning to Bitcoin to ease cross-border transactions.
Due to a serious lack of foreign currency in 2020, Nigeria has to restrict all overseas transactions using local ATM cards to $100 per month. Small-scale importers who normally purchase on Alibaba and other trade portals have no choice but to go elsewhere. Bitcoin was a ready-made option for both buyers and sellers.
Africa is likewise on the periphery of the global financial system. Unrestricted access to international internet payment platforms like PayPal. PayPal is only available in South Africa. This circumstance necessitated alternate payment solutions. A internationally approved payment method like Bitcoin, which can be converted to currency in many countries, has stepped in to fill the need.
2020 Bitcoin Adoption In Africa
In 2020, Africa will see a tremendous increase in bitcoin ownership, use, and trading volume. Nigeria, South Africa, and Kenya are in the top 10 nations for crypto-related Google searches.
Historically, small-scale P2P traders used Bitcoin in Nigeria to buy and sell other cryptocurrencies and fiat currencies through escrow-based exchanges or face-to-face transactions. 2020 brought a change. Traders, importers, and exporters wanting to avoid the Nigerian Central Bank’s exchange regulations have discovered Bitcoin.
Kenya’s advances in mobile payment systems offer it an advantage over other African nations when it comes to e-commerce transactions. Kenya has increased its edge with Bitcoin. Kenyan businesses are increasingly accepting cryptocurrency, according to the BBC. According to Paxful, bitcoin transactions from Kenya increased 400% year-on-year. Recognizing the potential of Kenya’s cryptocurrency business, the government implemented a digital tax to boost income.