Africa’s crypto centralized exchange trading accounts for less than 1% of global spot and derivative trading, a new report has revealed.
The report, in partnership with Boston Consulting Exchange, Bitget and Foresight Ventures, however adds that trading has been on the increase across the region, with South Africa pointed out as the largest market which can be seen by its ‘more advanced financial infrastructure and fiat-to-crypto payment rail.’
After South Africa, Nigeria is the second largest market.
According to the report, while South Africans mainly use crypto as an alternative investment, Nigeria’s the main use case for crypto is for savings.
The report also noted that the leading and most dominant players in South Africa, such as VALR and LUNO, are local players and exchanges due to their seamless on-off ramps and easty-to-navigate experiences that target retail users.
The report highlighted 4 key emerging market crypto use cases and how crypto exchanges are tapping these opportunities:
(1) Crypto-Backed Wealth Management
According to the report, for countries where the currency continues to experience devaluation for one reason or another, cryptocurrencies and stablecoins are used as a store of value, and as a means for gaining exposure to the American Dollar.
“In emerging countries, crypto exchanges are also taking steps to creating DeFi leading steps, providing crypto-backed wealth management for unbanked individuals.”
– Report, Boston Consulting
(2) Cross-Border Remittance
Cross-border remittance flow was found to be significant in emerging markets, but the current remittance process is long and expensive – on average 5-7% for emerging markets, and over 10% in some countries in Latin America.
Mexican crypto exchange, Bitso, partnered with Circle, owner of $USDC, to facilitate over $1.2 billion in yearly remittance flows between U.S. and Mexico.
(3) X-to-Earn
According to the report, the future of work coordinated by decentralized autonomous organizations (DAOs) will unlock new earning opportunities. These will be particularly attractive to emerging markets that struggled economically during the pandemic.
The report notes that one prominent example of x-to-earn is Play-to-Earn (P2E) and GameFi Applications.
Students in countries like Zambia are earning revenue from P2E games and this trend is accelerating across the continent.
(4) Crypto-Backed Payments
In emerging market eCommerce, crypto-backed payments are increasingly popular as a cheaper alternative to traditional payment infrastructures.
For example, leading Mexican retailer, Elektra, is accepting bitcoin payments via a BitPay integration.
Growth in emerging markets is one out of 3 factors that will continue to drive the overall growth of the cryptocurrencies, alongside:
- Increased institutional participation
- Rise of Web3
- Emerging markets adoption
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Read / Download the full report here.
