Southeast Asia and Sub-Saharan Africa account for a large proportion of the estimated two billion unbanked people in the world today. As a result, there have been a number of fintech innovations that have attempted to offer financial services to these class of people to bring them into the mainstream global commerce network.
With the rise of crypto-based fintech solutions, a number of startups have made giant strides into the African market. One of such startups is Paxful, a peer-to-peer (P2P) bitcoin market platform with operations all across the globe.
The Growing Bitcoin Adoption in Africa
Not unlike many other facets of the global economic narrative, the cryptocurrency market is mostly dominated by news out of the Western World and Asian countries like China, Japan, and South Korea. Seldom is any consideration given to Africa and other developing regions when considering the grand scheme of things as far as the crypto market is concerned.
However, according to figures released by Paxful, the African bitcoin market is experiencing tremendous growth. Paxful recently revealed its monthly bitcoin trading volume in Africa currently stands at $40 million, revealed on March 15. West African nations Nigeria and Ghana are also the second and third largest Paxful trading market behind only the United States.
Apart from its marketplace operations in Africa, the company is also at the heart of a number of charitable and philanthropic activities. In 2017, the company helped build 100 schools in Africa via its #builtwithbitcoin charity campaign.
Hyperinflation and the Need for Sustainable Savings Infrastructure
In Europe and America, cryptocurrencies are held as speculative investments or as a means of making anonymous payments. In Africa, the situation appears to be a little different as cryptos are seen as a way of safeguarding wealth. The currencies of many African countries have a history of severe volatility making them undesirable as vehicles for wealth storage. It has become common practice for upwardly mobile Africans to convert their financial assets in order to protect them from the negative effects of currency devaluation.
This point is particularly reiterated by the Paxful co-founder, Ray Youssef who used Nigeria as an example. According to him, the Naira (Nigeria’s fiat currency), has depreciated by more than 90 percent in comparison to the U.S. dollar within the last two years. Meanwhile, the rose by more than 1,000 percent in 2017 alone. While other developed nations in the world can point to the volatility of cryptos, the fiat currencies of many African countries are even more volatile hence the adoption of cryptos as a means of savings by many Africans.
Servicing the Unbanked and Underbanked Population
Massive currency devaluation isn’t the only systemic characteristic of many African economies, and a large percentage of their population is either underbanked or unbanked. In a Medium blog post by Ray Youssef, published on March 15, he spoke about the situation wherein underbanked and unbanked people are left out of the economic narrative.
Youssef commented that many people in that bracket are unable to participate in trade and commerce due to the failure of government in providing basic infrastructure. He reiterated the commitment of his company to building a robust P2P financial framework that can kickstart an African-led global economic revolution.