All across the world, digital currencies saw a spike in adoption and usage, and Africa was no different. The continent has held on to its position as the world’s fastest growing digital currency market, with countries like Kenya and Nigeria seeing some of the highest peer-to-peer trading volumes in the world. Bitcoin SV continued to make its mark, going beyond the hype and speculation and being used to make payments, with Centbee leading this charge.
Bitcoin SV adoption
Globally, 2021 was when Bitcoin SV set itself apart from BTC, BCH, Ethereum, and every other major blockchain project. Bitcoin SV became the world’s most data-rich blockchain network this year and mined record-sized blocks on the regular.
In Africa, the revolution was just as strong, if not even more so. With its very low fees and instant transactions, Bitcoin SV has offered people an alternative payment method that allows them to also send funds cross-border without the inconvenience and high costs they have had to contend with for decades.
Centbee led the BSV revolution in Africa, opening up even more avenues for its users to spend their BSV on day-to-day transactions. On top of being able to pay for ride-hailing services like Uber, streaming services like Netflix, Apple Music, buy airtime, pay for electricity, and more, Centbee has added a feature allowing users to shop at major shopping outlets.
Centbee’s potential was recognized in 2021 by local regulators, and in April, it emerged as one of the six firms selected to join a local watchdog’s regulatory sandbox. The sandbox, conducted by the Intergovernmental Fintech Working Group (IFWG), received applications from over 50 fintech firms, but only six made the cut.
Centbee’s Mint Money, which focuses on cross-border funds remittance powered by Bitcoin SV, was admitted into the regulatory sandbox a few months later.
Domineum Blockchain Solutions is yet another firm that has pushed for Bitcoin SV adoption in the continent. Unlike Centbee, Domineum focuses more on the application of the BSV blockchain, offering a Blockchain-as-a-Service product line, and has projects in Nigeria and Sierra Leonne.
In Nigeria, the company is developing a land records management system. It is also working with the Ministry of the Interior in the West African country to put marriage records on the BSV blockchain.
In another major highlight for Bitcoin SV, VXPASS opened its blockchain-based COVID-19 vaccination verification program to licensed medical practitioners and patients. VXPASS is a platform built on Bitcoin SV, partnered with a local initiative in Lesotho to leverage the blockchain to make vaccine card distributions and other logistics in the country paperless.
Digital currency adoption
While in years past, Africa has shown great potential in digital currency adoption, the region set new records and set the pace for adoption globally this year.
Throughout the year, African heads of state and other leaders have called on the people to adopt digital currencies as they could open up new opportunities for the region. In August, Ghana’s vice president stated that digital currencies could enhance trade in the continent, while Zimbabwe’s finance minister called for digital currency integration in cross-border remittances.
The continent heeded the rallying calls, with Africa seeing a 1,200% growth in digital currency adoption, according to data from Chainalysis. The report revealed that the need for cheaper remittances, the rise of P2P trading, and saving needs were the biggest factors. In 12 months starting in July 2020, the region received $106 billion as five countries from the region ranked in the top 20 of the Global Crypto Adoption Index.
Kenya has been the standout once again, with Chainalysis revealing that the East African country had emerged as the global leader in P2P trades. This was the second consecutive year that Kenya had ranked first. As some in the local digital currency scene told CoinGeek, education and high Internet penetration played a big part in the increased adoption.
The African digital currency market is expanding beyond simple retail trading, with South Africa leading the race to approve Africa’s first digital currency ETF. In a year when the U.S. Securities and Exchange Commission (SEC) approved the first BTC ETF, South African companies were quick to file applications, as well as the mainstream market, became ever more intertwined with the digital currency world. The Johannesburg Stock Exchange, which the firms applied to, has rejected previous applications but has yet to rule on the latest round of applications.
The adoption has extended to blockchain technology, with more African countries looking to integrate it into their systems. Kenya is seeking to take its voting on-chain to reduce electoral fraud and manipulation cases that have proven deadly in the past.
Africa embraces CBDCs as regulators up their game
While China has continued to receive global attention for its central bank digital currency (CBDC) efforts, and rightly so, as it has made huge strides with its digital yuan, an African country overtook China and launched its CBDC this year. Nigeria, which is Africa’s largest economy, launched its e-Naira in October, and despite a few initial glitches, it has taken off.
According to its central bank, Nigeria has been exploring and developing its CBDC for five years, but 2021 was when it took the leap. It joins the Bahamas as one of the few countries to launch its own CBDC.
While Nigeria leads the continent, it’s not been the only country interested in CBDCs. South Africa’s interest started earlier this year when the Reserve Bank commissioned a feasibility study on CBDCs as complementary to cash. A few months later, the bank partnered with its counterparts in Singapore, Australia, and Malaysia on a joint CBDC study.
Ghana has also been pursuing a digital cedi and was thought to be in a race with its neighbor Nigeria over who would launch their CBDC first. The Ghanaian central bank partnered with a German firm in August for a CBDC pilot test, and a few months later, it revealed that it was working on allowing offline payments for its CBDC.
Regulators have also caught on this year, and most countries are either working on or are researching how best to regulate the industry. Kenya has already imposed a 1.5% Digital Service Tax that applies to digital currencies, while in South Africa, tax agencies are already cracking down on cryptocurrency tax evaders.
The regulatory crackdowns have come at a time when the African digital currency market has become quite susceptible to theft and scams. The biggest this year was Africrypt which is reported to have stolen $3.8 billion. As with most scams, it promised huge returns but uniquely targeted high-net-worth individuals whom it asked to keep a secret. This only brought in more people before it all came crashing down.
What lies ahead in 2022?
Despite having the best year yet, the digital currency industry in Africa still has massive room for growth. Bitcoin has yet to make its way into the day-to-day payments in most countries. Centbee is making great strides in this regard, but its reach for most products has been largely limited to its home country of South Africa.
For Bitcoin to take root, regulations must catch up. Nigeria and South Africa are already at advanced stages of formulating these regulations, and hopefully, they will implement them in 2022. However, there will be hurdles since some, like South Africa, have already made it clear that they consider Bitcoin an asset and not a currency.