In November 2019, Twitter CEO Jack Dorsey predicted: "Africa will redefine the future of Bitcoin."

Today, this prophecy is coming true step by step.

In the past month, the volume of bitcoin transactions in Africa has exploded twice in a row, surpassing the highest level in 2017.

According to data from the data analysis platform UsefulTulips.org, in the past week, only two major trading platforms, LocalBitcoins and Paxful, had $14 million in Bitcoin trading volume from Africa.

Another data analysis firm, Arcane Research, released a report last week stating that although the number of Bitcoin users in Africa is small, it is "full of hope."

Full of hope, refers to the high proportion of Bitcoin users in all Internet users.

The report pointed out that in South Africa, 13% of Internet users hold or use digital currency, ranking third in the world; in Nigeria, this figure is 11%, ranking fifth in the world.

The average for all countries in the world is only 7%.

Google data shows that the country with the highest search rate for "Bitcoin" is Nigeria in Africa. The other two African countries - South Africa and Ghana - ranked fourth and fifth respectively.

Africa is becoming a new continent for Bitcoin.

"Since 2016, the entire African bitcoin market has become active. Especially the four countries of Nigeria, Egypt, South Africa, and Kenya, they have been very active." Cryptology founder Thomas told a blockchain.

Cryptology is a digital currency transaction and liquidity provider focusing on the African market. It is headquartered in Uganda, Africa, and has offline outlets in more than ten countries in Africa.

And its main business is to provide bitcoin over-the-counter transactions, allowing African users to exchange local currencies for bitcoin.

Thomas said that the overall activity of the African digital currency market continues to increase with the improvement of the digital currency market, but there are still huge differences in the level of development among African countries.

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Sub-Saharan Africa Bitcoin trading volume map source: UsefulTulips.org

With a population of 200 million, Nigeria is the largest economy in Africa and the country with the most developed bitcoin transactions in Africa.

"From the data we can get, the daily Bitcoin transaction volume in Nigeria is stable at more than 1,000, and can reach 3,000-4,000 at the most." Thomas told a blockchain.

At the same time, Nigeria's digital currency trading ecosystem is becoming more and more complete.

“Nigeria has a number of local exchanges, and major exchanges such as Binance have also opened fiat currency channels locally.” Thomas said, “In addition, blockchain payment companies that focus on cross-border payments, such as BitPesa, are also very popular locally. .”

Outside of Nigeria, the second largest Bitcoin trading market in Africa is South Africa.

"South Africa is an old economic powerhouse in Africa, with the second largest GDP in Africa and the first per capita GDP. South Africans have strong purchasing power and a high demand for digital currency." Thomas said.

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Why Bitcoin has become the new darling of African people?

In the eyes of many practitioners, the weakness of the African banking system is the main reason why digital currencies such as Bitcoin are sought after.

In Africa, the financial infrastructure is not sound. "Banks in most African countries are extremely bureaucratic and unwilling to accept small deposits. They will set high KYC thresholds, and even prevent many farmers from completing KYC." Thomas said.

According to the latest statistics from the World Bank, in Africa, even 66% of the residents do not have bank accounts.

Without a bank account, you can't enjoy financial services - you can't save money, you can't transfer money, you can't invest.

Also, African banks are not doing a good enough job for the few people who have bank accounts.

“Africa’s banking system is very unfriendly to users, and the handling fees are extremely high.” Thomas said, “When you go to the bank to exchange local currency into US dollars, the handling fee is as high as 17%.”

Various problems in the banking system have caused African people to start looking for new financial tools. Bitcoin stands out from this.

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Documentary African Banking: The Bitcoin Revolution

In the film, Riccardo Spagni, the founder of Monero and living in South Africa, said that people can easily exchange their local currency for Bitcoin, so that they no longer need to rely on the government to maintain economic stability.

In terms of cross-border payments, Bitcoin is also promising.

With more than 50 countries, Africa is the continent with the most countries in the world. African people always have demand for cross-border transfers.

But in Africa, transferring money across borders is not easy. There are huge differences in the financial policies of African countries. Many countries have high fees for cross-border transfers, and some countries even prohibit remittances abroad.

So many Africans even use trucks to transfer cash across the border.

"Recently, it is becoming more and more difficult for African residents to send money outside of Africa. Countries such as Zimbabwe even ban the use of US dollars, British pounds and other foreign currencies in their countries." Ray Youssef, CEO of digital currency exchange Paxful, said in an interview.

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Paxful platform interface

African people use local currency to buy gift cards on the black market, and then use gift cards to buy bitcoins for cross-border transfers.

Compared with bank transfers, this gift card-bitcoin transfer system not only has faster remittance speed, but also avoids foreign exchange controls. In the cross-border money transfer market in Africa, Bitcoin has already beaten the banks.

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The strong demand for Bitcoin by the local people has attracted a group of blockchain practitioners to enter the gold rush in Africa.

However, Thomas pointed out that Africa does not have a complete blockchain ecosystem, and many African blockchain applications are still at the stage of "storytelling".

For example, Bitland, a well-known blockchain project in Africa, tries to use blockchain to record land property rights data. In Kumasi, the largest city in Ghana, this project has been piloted.

"When it comes to blockchain projects in Africa, Bitland is often introduced as a positive case. But in fact, this project has not been able to really run." Thomas said.

Right now, African people need digital currencies like Bitcoin more than industrial blockchains. Only the latter can fill the gap in traditional financial services.

In Africa, the industry ecology related to digital currency, such as mining, over-the-counter transactions, digital currency exchanges, etc., is booming.

"In the eyes of many people, Africa is a country that lacks electricity. But in fact, some African countries are very rich in hydropower resources. What they lack is not electricity, but power transmission and transformation facilities." Thomas said.

In Ethiopia and other African countries, many power plants have generated electricity, but they cannot sell it at all because of the lack of power transmission and transformation facilities. Bitcoin mining can fill this gap.

"At present, through special channels, electricity can be obtained for 1 cent per kilowatt-hour or even free in Ethiopia." Thomas told a blockchain.

In addition to mining, the bitcoin ecosystem in Africa is almost all based on transactions and payments.

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African Bitcoin Trading Ecological Map Source: Deyun Lora

C2C exchanges, such as Paxful and LocalBitcoins, are the most common Bitcoin trading platforms in Africa. On the C2C platform, the exchange only provides the platform, and buyers and sellers freely agree on the transaction method.

OTC exchanges have also gained ground in Africa. In these exchanges, the exchange itself is the seller. Buyers pay the exchange and receive bitcoins.

"In Africa, OTC transactions mainly address two practical needs. One is to act as a value binding object for cross-border transfers between African countries, and the other is to help local digital currency investors exchange Bitcoin." Thomas told a blockchain.

In fact, in African countries such as Kenya, mobile payment has been booming. These mobile payment providers are also constantly trying to expand their digital currency business.

But it is regrettable that digital currency has not only brought inclusive financial services to Africa, but also the accompanying fund scams.

In 2019, a fund project called "Bitcoin Wallet" appeared in South Africa. The project claims that as long as everyone deposits money into this wallet, their assets will double in 15 days.

Locally, a promotional video of a Bitcoin wallet went viral on social networks. In the video, a woman puts thousands of rand cash (1 RMB = 2.4 rand) on the top of the car, claiming that the money was all earned through a bitcoin wallet.

The deposit method of Bitcoin wallet is also very down-to-earth, and they support cash investment. During that time, more than 2,500 people lined up to pay at the gate of the Bitcoin wallet company every day.

In order to keep warm, they lit a bonfire in the street. Some people even spent 500 rand (about 200 yuan) to hire homeless people to help them line up.

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Source: Ladysmith Herald

In 2019, there will be a larger fund sweeping South Africa. This fund is called "BTC Global".

Local media reported that BTC Global has become one of the biggest scams in South African history. It caused 27,500 people in South Africa to be defrauded, and the defrauded amount was as high as 50 million US dollars.

One of the reasons why funds are booming in Africa is that Africa lacks a compliant and stable securities investment market.

In addition, African people have limited information, low awareness of anti-fraud, and are easily exploited by funds.

The traders of these funds may be hiding in the Middle East packaging project. After that, they will first launch projects in African powers like Nigeria and Kenya, and then launch projects in second-tier countries with limited information such as Ghana, Cameroon, and Mali.

In the end, it was these second-tier countries that were the most robbed of funds.

Africa is becoming a fertile ground for Bitcoin.

Under the triple pressure of weak banking system, foreign exchange control, and inflation, African users began to turn their attention to Bitcoin.

The popularity of smartphones and mobile payments has given Africa the opportunity to skip banks and Internet finance and directly enter the era of digital currency.

But at the same time, the shadow of the capital market is also hovering over Africa.