Crypto Adoption in Africa is a fact that one cannot deny; cryptocurrencies rank among some of the most popular search terms on Google and other search engines in many African countries. So much has the interest in cryptocurrencies been among Africans that governments have panicked so bad and put hastily crafted regulations in place.
The average African wants security; a thing sorely lacking in a continent where people can suddenly find themselves having to wake up in the middle of the night, to the sound of gunfire, and having to flee from their homes which they may never see again.
Africans are turning to cryptocurrency. But is this a good thing, or a case of jumping from frying pan to fire?
Crypto Adoption in Africa: Curse or Blessing?
To answer this question, it is necessary to first consider some of the reasons why Africans think that crypto is a blessing. Some of them are outlined below:
African Crypto Adoption: A Blessing?
1. Crypto Is Easy To Carry
The Jews fled the pogroms circa World War II by carrying their wealth in gold and diamonds. While those are still viable options to consider today, crypto actually does one better because owners only need to have their passwords. If necessary, the passwords can be codified, and carried on a piece of paper.
Surely, a sheet of paper is a lot better than a bag of gold or diamonds, especially when a person has to flee the sudden breakout of war or violence. Even if one must pass through checkpoints with armed soldiers looking to rob refugees of their wealth, said soldiers are unlikely to notice the harmless pieces of paper.
Africans in highly volatile areas will therefore find crypto especially the more established ones like bitcoin, ethereum, and tether irresistible for the lure of portability which they offer.
2. A Hedge Against Bad Economy
Other times, it is not the fear of having to run away from the country that forces Africans to adopt cryptocurrency; it is the fear of having to stay in a country with a bad economy. Africans often find that their economies are badly managed, and that their currencies plummet steadily, and for long periods.
They therefore think that it is necessary to have some kind of security, some kind of hedge against the currencies plummeting.
3 Digital Assets Promise Deflation
What could be more attractive to a person fleeing from inflation than an asset which is advertised to guarantee (theoretically) deflation? Bitcoin, and other cryptocurrencies are built around the idea of deflation which is achieved through halving, therefore ensuring scarcity. They are therefore a good hedge against poor economies and plummeting currency value- at least on paper.
African crypto adoption could mean the difference between retiring in comfort, or dying of hunger in old age.
4. A Way Out From Poverty
Regardless of what you hear; there are actually people who are consistently profitable when it comes to trading cryptocurrencies. These people are able to live quite comfortably, and their lifestyles are just too attractive to many young Africans looking for a way out from poverty.
Aside from those trading cryptocurrencies, many have been able to make huge capital gains just by buying crypto. Some of the cryptocurrencies that have made millionaires so far include Bitcoin, Shiba Inu, Ethereum, Dogecoin, and Cardano.
Those are the reasons why Africans find themselves running to crypto. However, a person who decides to run should first consider whether he has what it takes to run the distance. Otherwise, he could run into trouble. The following points consider why Africans could be running into trouble with crypto.
African Crypto Adoption: A Curse?
1. Crypto Ponzis Target Africans
Sometimes, what you call cryptocurrencies are nothing but Ponzi schemes designed to take money from the hands of unsuspecting investors. In many countries of the world there is strict regulation of the market, and those who create Ponzi schemes face heavy penalties.
Where do these unscrupulous business people turn their attention? Africa! There is no regulation, no education, and so many desperately poor people. This mix of circumstances make crypto Ponzi schemes especially profitable in Africa. By the word “profitable” what is meant is that the creators of these Ponzi schemes make money, while the investors become poorer.
2. Don’t Buy Shitcoins
Across the crypto space the term “shitcoins” is what people use to describe these Ponzi schemes, and all the evidence points to Africa as the target. Some of these schemes use the internet as their marketing vehicles, while others set up physical offices in many African states. Investors wake up one morning to find the offices locked up, and their money gone.
3. Crypto Is Volatile
Crypto is the most volatile asset in the market at the moment; there is no investment instrument nearly as volatile as cryptocurrencies. The prices are affected by demand and supply, as they happen every minute.
This means that badly timed investments in crypto can lead to huge losses. To illustrate; anyone who bought bitcoin on November 12, 2021, when the price was $64,600 would find themselves making huge losses because the asset saw a sharp decline immediately afterwards; going down to $19,224 on the 1st of July 2022.
4. It Runs On Hype
Another thing to consider is that there is a lot of hype surrounding crypto. When bitcoin was at $64,600 in November 2021 it looked like the best investment in the world. Some analysts predicted that the price would go on to $250,000, and many millionaire hopefuls joined the bandwagon.
Crypto adoption in Africa was at its height in 2021 during the Bitcoin bull run. Many of the millionaire hopefuls described above were Africans. It was only a matter of weeks before their hope was replaced with tears.
The only way out of this mess seems to be mining, which is out of reach of Africans.
5. Mining Is Out Of Reach Of Africans
Mining is the only way to get the crypto without running the risk of buying at unfairly high prices. This is all about creating new coins of specific cryptocurrencies. It involves using computer processors to solve highly complex equations, and getting rewarded with special codes. These codes, when added to a blockchain become units of crypto.
But mining is expensive. It takes a lot of money to buy mining equipment, and a lot of energy to operate them. Most Africans simply cannot afford such an investment.
6. It Is Designed To Be Difficult
Again, in order to ensure scarcity (and to ensure deflation), these cryptocurrencies are designed to become more difficult to mine. As time goes on, they are designed to reward miners with fewer and fewer coins, until a limit is reached.
The winners therefore are those who started mining 5 to 7 years ago, and who hold most of the valuable crypto. African crypto adoption is therefore limited to buying these assets at market, and running the risks explained above.
Is there some kind of balance, or way to reduce the risks? Read the Bottom-line below.
- How To Identify Good Crypto Airdrops
- Why You Shouldn’t Buy Bitcoin This Week
- Top Cryptocurrencies For Profit
African crypto adoption has been both a curse and blessing. In the area of portability (being easy to carry) there is no asset better than cryptocurrency. However, too many Africans are getting ripped off because they want to invest in crypto.
If this ugly trend is to be stopped then those at the helm of affairs will have to do better to manage their economies. It is counter productive trying to stop poor people from finding ways to secure their futures. Crypto adoption in Africa will not stop as long as the people have no trust in their leaders.
Safety first! Before trading crypto, please undertake extensive training because this is a very risky venture where most people lose their money.