Cryptocurrency trading is buying and selling crypto coins on exchange platforms such as Binance, Coinbase, and Paxful.
Usually, traders want to purchase digital currencies with the hope of increasing in value and then selling them and capitalizing on the profit.
As of 2022, there are over 12,000 cryptocurrencies in existence, all with distinct features and qualities that traders tend to research on for investment. This is not so far off from investing in stocks or equities.
Africa’s crypto centralized exchange trading however accounts for less than 1% of global spot and derivative trading.
While Africa lags the rest of the world in crypto trading and adoption, the continent is home to some of the fastest growing markets for holders, with countries such as Nigeria, Morocco, Tanzania, Kenya, Togo, Ghana, and South Africa having been highlighted as hot spots for this activity.
Nonetheless, crypto trading in Africa faces several obstacles that can hopefully be addressed and encourage more people to adopt and trade.
Below is a breakdown of the obstacles:
1.) Scams and Fraud
Perhaps the biggest obstacle to crypo trading is the fear people have that they will lose their investments to scammers and fraudsters.
Crypto activity on the continent has become associated with these negative practices which have entered the minds of regular Africans based on conversations on the ground.
While some understand that cryptocurrencies are not inherently meant to steal their funds, they are not sure about the security and safeguards that platforms and exchanges have to protect their funds.
What’s worse is the bad practices in the industry which have seen big exchanges like FTX collapse with traders’ funds in it. It seems the industry is not very trustworthy, particularly with funds that are electronic in nature.
2.) Lack of Suitable Trading Platforms
There are hundreds of crypto trading platforms out there but some enthusiasts feel that the best platforms do not really cater to the needs of traders in Africa.
One concern is that some of these exchanges do not offer the option of quick withdrawals in fiat currency to local bank accounts.
For example, opening a domiciliary account to keep dollars in Nigeria is not easy. With exchanges not having suitable payment methods that cater to the average African, most people are turned off by the whole concept of crypto trading.
3.) High Trading Fees
Trading fees refer to fees exchange platforms charge, such as deposit and withdrawal fees.
Crypto trading platforms usually charge these fees in US Dollars, and we cannot deny that most African countries, for example, Nigeria, have experienced a significant decline in their currency. In the third quarter of 2022, the Naira depreciated by 22.4 per cent.
With the high exchange rate between Naira and the US Dollar, the average Nigerian cannot afford extravagant trading fees charged in Dollars.
4.) Transaction Speeds
Contrary to the promise of quick transactions, a transaction on a regular cryptocurrency trading platform could take 10 minutes to hours, possibly an entire day on certain platforms. This is one of the reasons why people are hesitant to accept crypto payments and even trade crypto assets generally.
The transaction speed depends on which crypto coin you trade, and it also depends on the amount of network fee paid. But aside from the confirmation time from blockchain networks, trading platforms are slow, especially regarding withdrawals.
5.) The Complexity of Crypto Trading
While crypto is meant to be available to anyone, it is not easy to undertake crypto trading.
According to people we interviewed, when people think of cryptocurrency trading, they think of the red and green colored line graphs, and thus become discouraged by its supposed complexity.
It can be pretty scary and confusing when you open a trading app for the first time and are met with quite a complex interface and you have to go through a long process to initiate your transaction. Because of this, most people abandon it because it is too much to handle.
These are some of the obstacles that, if resolved, can help drive trading and adoption further in Africa.
__________________________________
Follow us on Twitter for latest posts and updates
Join and interact with our Telegram community
__________________________________
__________________________________
