How Are P2P Platforms Boosting Bitcoin And Cryptocurrency Use?
In 2020, sub-Saharan Africa received $48 billion in remittances, with Nigeria accounting for half of the amount. The bulk of these remittances came from Europe and North America. Again, P2P platforms have played a pivotal role in remittances and retail bitcoin and cryptocurrency payments.
According to Blockchain Analysis , crypto-backed remittances are in a growth trajectory. The number of remittances under $1,000 has grown steadily since April 2020, bar June 2021 when there was a substantial drop compared to the previous month.
Besides remittances, African business people are relying more on bitcoin for commercial transactions. Sending fiat currencies for transactions can be challenging due to regulatory bottlenecks. For context, Nigeria limited offshore debit card transactions to $500 at a time. For that reason, many people have resorted to using bitcoin for their larger transactions.
Wealth And Value Preservation
With the hard economic times, bitcoin has become an ideal asset for preserving wealth and value. During the time of devaluation, the Paxful growth accelerated in Nigeria. People seeking growth are investing in bitcoin and the more speculative cryptocurrencies as well.
African countries are set to follow the footsteps of China and launch their own central bank digital currencies. In fact, Nigeria and Ghana have already rolled out their CBDCs. This means that users can send and hold blockchain-based versions of their fiat currencies in digital wallets.
Luno Growth
As mentioned, retail bitcoin and alternative cryptocureency payments in Africa have made significant contributions to the growth of P2P platforms. One of the platforms that has grown significantly is Luno. Africa customers dominate the platform after increasing 271% since January 2020, to reach 4.7 million of the total 7 million customers. The platform has played a great role in the growth of bitcoin adoption by creating infrastructure and introducing local currencies into the crypto marketplace.
Remember, retail has played a key role in the growth of bitcoin and altcoins, such as during the bull run in 2018. But the trust issue was a key hindrance. According to a Luno Survey, “54% of Africans are ready to adopt a single global digital currency ” which is a considerably higher percentage than 41% in Asia and 35% in Europe.
South Africa Leading The Way In Regulation
Without a doubt, there is a need for regulations to support the sustainable growth of the bitcoin market. When it comes to regulating the financial field, South Africa is subject to the strongest regulatory body on the continent – the Financial Sector Conduct Authority. This financial institution regulator brings to the table investor protection and ensures all FSCA licensed companies are playing by the rules and are not taking advantage of their clients.
With an expected increase in bitcoin adoption in South Africa, the market regulators have embraced the trade by enacting requisite laws. The regulations are designed to prohibit irregular use of bitcoin for nefarious activities. Besides enhancing transparency, the regulations will prevent funding terrorism and money laundering by addressing customer identification, verification, and keeping track of their transactions record to monitor usual activities. The regulations will also limit the risk exposure of banks which could spill over to the economy causing financial instability.
That said, South Africa is charting a new path which is not the case with many other countries. Regulators in countries like Kenya, Nigeria, and Zimbabwe have prohibited banks from processing bitcoin transactions.
Final Words
Africa has immense economic potential. Although many countries lack good infrastructure and regulations, they can leverage bitcoin and blockchain technology to boost their growth. In fact, the region has adopted bitcoin and altcoins massively, especially for retail-sized cryptocurrency payments, which assuredly will cause ripple effects in other sectors, leading to more overall growth and adoption.
This is a guest post by Jerry Goddard. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.
