The African continent has the potential to become one of the leading cryptocurrency markets in the world. Kenya has the largest share of its population with cryptocurrencies in Africa, according to a report by United Nations Conference on Trade and Development (UNCTAD). The report says that 8.5 percent of the population, or 4.25 million people own cryptocurrencies in the country.
This places Kenya ahead of developed economies such as the United States, which is ranked sixth with 8.3 percent of its population owning digital currencies. On the other hand, war-torn Ukraine is ranked top, with a 12.7 percent share of its population with cryptocurrencies, followed by Russia (11.9 percent), Venezuela (10.3 percent), and Singapore (9.4 percent).
The UNCTAD report attributes Kenya’s high ranking to the country’s exposure to the ongoing meltdown in the cryptocurrency market. With the crypto market in a state of flux, it remains to be seen how Kenya will fare in the coming months. However, for now, it seems that the country is leading Africa in cryptocurrency ownership.
According to UNCTAD, South Africa is the second-ranked country in Africa and eighth globally, with 7.1% of the population that owned or held cryptocurrencies in 2021. In Nigeria, which is one of the biggest cryptocurrency markets globally, about 6.3% of the population own or hold cryptocurrencies. This means from the country’s population of 211 million inhabitants, just over 13 million were owners of digital currencies in 2021.
The UNCTAD data shows that the number of Nigerians who invested in digital assets will likely increase considerably in the coming years.
Cryptocurrency popularity spikes in Kenya
UNCTAD believes that Kenya’s adoption of digital currencies is rising due to the low fees charged by crypto exchanges, the speed with which they can send remittances, and the internet access that allows them to transact online.
According to the report, “Kenya has emerged as a leader in terms of uptake and usage of digital currencies by its citizens.” It noted that “the crypto-economy has been growing rapidly in Kenya, several citizens having used digital currencies over the last year.”
Cryptocurrencies are a hot topic these days. They’ve made headlines for their wild price swings, their potential as a new way to send remittances, and even their potential as a new form of currency for developing nations.
But now, there’s a new development: cryptocurrencies are also being used by middle-income individuals from inflation-hit developing countries as a way to protect their household savings.
In a report on its findings, UNCTAD acknowledged that cryptocurrencies have grown in popularity because they are “an attractive channel through which to send remittances.” The UN also said digital assets are popular among middle-income individuals in developing countries because they see them as a way to protect their savings against inflation.
UNCTAD report finds that while cryptocurrencies can enable fast and cheap payments, their use also has potential downsides. For example, if the price of a cryptocurrency drops significantly, it could result in a loss for investors who purchased the digital asset with a loan. Also, because some cryptocurrencies are not yet widely accepted as payment for goods and services, there is a risk that people will use them for illicit activities such as money laundering and tax evasion.
In addition to these concerns about crypto usage and its potential risks, UNCTAD determined that “their use may lead to financial instability risks.” The report states that the main concern is that because of their volatility and high-risk profile, crypto assets are likely to encourage speculation rather than adoption in retail or commercial settings.