Cryptocurrency Use in Africa

A short overview of the different ways young Africans can use cryptocurrency.

Godwin France
February 2, 2023
min read

Welcome to the exciting world of cryptocurrency. If you're a young African looking to get in on the action, you're in the right place. In this post, we'll go over some of the basics of cryptocurrency and show you how you can use it in the year 2023.

Let's define what cryptocurrency is. Cryptocurrency is a digital or virtual currency that uses cryptography for security and is decentralized, meaning it is not controlled by any government or financial institution. The most well-known cryptocurrency is bitcoin, but there are thousands of others.

One of the main benefits of cryptocurrency is that it allows for peer-to-peer transactions, meaning you can send and receive payments directly to other users without the need for a bank or other intermediary. This makes it easy to make international payments, and it also allows for more privacy and security compared to traditional financial transactions. Another is that it can be self-custodied, meaning that one can keep it secure without relying on third-parties (such as banks). A third benefit is that in the case of some crypto assets, bitcoin specifically, the inflation rate is fully predictable and the total number of units (bitcoins) that will ever exist is predetermined (21m in the case of bitcoin).

Why should you care?

In 2023, there are many ways for young Africans to use cryptocurrency. One option is to use it for online purchases. Many online retailers now accept cryptocurrency as a form of payment already. This trend is expected to continue in the coming years. You can also use cryptocurrency to send money to friends and family internationally, as the fees for these transactions are much lower than traditional money transfer services.

Another option is to invest in cryptocurrency. While there are always risks involved with investing, the cryptocurrency market has shown strong growth in recent years, with the total market capitalization reaching over $3 trillion in 2022. If you're interested in investing in cryptocurrency, it's important to do your research and be aware of the risks. Make sure to diversify your portfolio and only invest what you can afford to lose.

Trading Crypto Assets

Before you start investing in cryptocurrency, it's important to understand the difference between centralized and decentralized exchanges. A centralized exchange is an exchange that is controlled by a single entity - a company. This type of exchanges often have stringent KYC/AML requirements and higher fees, but they may also offer more convenience and deeper liquidity. A decentralized exchange, on the other hand, is an exchange that is not controlled by a single entity. These exchanges offer pseudonymity and are often less regulated, but they may also be less stable and more vulnerable to hacking and high slippage.

Nigeria has experienced significant increase in the adoption and use of cryptocurrency in recent years. According to a report from the Central Bank of Nigeria, the volume of bitcoin traded in the country more than doubled between 2020 and 2021, and the number of Bitcoin users in the country increased by over 50%. This trend is expected to continue in the coming years as more people become aware of the benefits of cryptocurrency.

Interestingly, bitcoin's price was recently 60% higher when calculated in accordance with the official naira-to-U.S. dollar exchange rate by the Central Bank of Nigeria.

Overall, cryptocurrency offers many exciting opportunities for young Africans in 2023. Whether you're interested in using it for online purchases, sending money internationally, or investing, there are many ways to get involved in the cryptocurrency world.

Just be sure to do your research and understand the risks before getting started.
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