Africa is in the driving seat of the global crypto economy, with Kenya in the spotlight
While it has been a devastating year for many industries, the crypto industry is ending the year on a high note. The positive movement in the adoption of cryptocurrencies, regulatory discussions, and developments, as well as several large names in retail and institutional finance dipping into crypto ownership and promotion, are collectively improving a global outlook on Bitcoin and other digital assets.
Crypto adoption in emerging markets
Having grown to nearly 5 million users since launching 5 years ago, global transactions on the Paxful platform have increased by almost 31% in 2020 compared to the year before.
“Nigeria, Ghana, Kenya, and South Africa are our main markets in Africa. There’s no question that emerging markets are the future of the crypto economy. That’s been clear to us for some time, as we see on a daily basis how tech-savvy Africans are using Bitcoin to invest, trade, send money abroad and accumulate wealth. Bitcoin helps improve lives and gives opportunities for personal and entrepreneurial development. Paxful is all about bringing financial inclusion to the emerging world and we’re ecstatic to help so many people with limited access to the traditional financial services,” says Paxful CEO and co-founder Ray Youssef.
Paxful has seen impressive growth in 2020 so far with Kenya being one of its top African countries with almost 390% volume growth YOY. Kenyan user registrations on the platform also increased by nearly 575% this year, demonstrating remarkable growth and appetite for crypto in Kenya. It is evident that P2P marketplace like Paxful speaks to a broader audience offering real-life use cases for digital assets, and pushing crypto adoption in the country to new heights.
The rise of stablecoins
While Bitcoin remains the king of cryptocurrency, this year also saw explosive growth of stablecoins, which are a type of cryptocurrency pegged to fiat currencies like USD, for example. Stablecoins are designed to minimize the volatility of the coin and give an option to convert a highly volatile Bitcoin to a more stable digital asset.
In 2020, the total value of stablecoins exceeded $20 billion – nearly a 300% year-on-year increase. Many experts believe that consumers are flocking to stablecoins for its stability, as it gives them an opportunity to protect their assets during crypto-market turbulence.
Meeting the demand for stablecoins, Paxful introduced Tether (USDT) to assist customers in expanding their portfolios. USDT has been very well received by users, especially in developing countries that often struggle with high inflation. Among African-based Paxful users alone, a 431% increase in trade volume has been recorded since the introduction of Tether. The addition of USDT came alongside the hedging option – or the ability to convert the Bitcoin to Tether, to lock in the price if there are price drops expected ahead. Once Bitcoin stabilizes, users can convert their Tether back to Bitcoin thus preserving it at the desired price. Stablecoins are an excellent tool in combating volatile currencies.
Bitcoin as humanitarian aid
NGOs and charities also played a part in the boosting of the crypto industry, by accepting Bitcoin to support humanitarian causes. In Kenya, Paxful provided thousands of masks for frontline workers in the Kibera slums of Kenya through Shining Hope for Communities (SHOFCO),a grassroots movement based in Nairobi. Additionally, Paxful partnered with Zam Zam Water, a humanitarian organization, to build a third school in Kenya powered by Bitcoin. The third school, which will come fully equipped with a state-of-the-art water well system, will be built in Machakos County, Kenya for children aged 3-6 years old.
In Nigeria, during the protests against police brutality, crypto donations became a preferred mode of providing financial support to the communities involved. In October 2020, one Nigerian advocacy organization said to have collected around 40% of the $387,000 donations it raised to assist the protestors. Similar developments have been observed in Venezuela, Chile, and even Zimbabwe. Not to mention crypto donations are traceable and are way cheaper versus using traditional money transfers.
Many of the leading crypto industry operators have philanthropy strategies and departments, which are harnessing the power of the crypto-economy to the benefit of social causes. Paxful also believes in the philanthropic power of Bitcoin. In response to the COVID-19 crisis, the company launched the Africa Fund aimed to support African charities in times of need. Thousands of dollars in Bitcoin donations helped provide meals, personal protection equipment, and other essentials in Kenya, South Africa, and Nigeria.
Paxful launched its #BuiltWithBitcoin charitable initiative in 2017, with the goal to build 100 schools, water wells, and community gardens for sustainable agriculture funded entirely by Bitcoin across emerging markets. The initiative showcases the capability of crypto in the charity and philanthropy sectors. The latest and fourth school campus sponsored by the #BuiltWithBitcoin is being built in Nigeria and is due to open in 2021.
A node of entrepreneurial growth
In a very unstable global economic climate, where several industries have suffered great losses, many crypto companies have been able to maintain a strong growth trajectory. Paxful is committed to sharing its growth with talented business partners from across the globe. This includes exciting collaborative ventures in Africa with crypto-industry partners such as Bitsika, Uhuru Wallet, and the Satoshi Centre among others.
Paxful is a responsible employer who is proud to have been named by Forbes as one of the top global start-up employers offering attractive benefits for staff including sports and food allowances, paid parental leave, new-born bonuses, and medical insurance to name a few.
Youssef concludes: “The crypto economy is becoming an irreplaceable part of the global economic development – even in difficult times – it offers a financial safe-haven and entrepreneurship opportunities. What’s especially heartening, is that the industry is incredibly receptive to allowing younger people to thrive and quickly climb the ladder to financial independence.”