Africa is a hub for crypto adoption
Lagos, Nigeria consistently ranks among the top cities for global crypto adoption. [peeterv via Getty Images]
There’s never a dull moment on the blockchain. Here’s what you need to know this week:
Africa has emerged as an epicenter for crypto adoption. Entrepreneurs in Ghana, Nigeria, and South Africa are helping lead the charge.
The CFTC sued Binance. We’re taking a closer look at the suit and breaking down the basics.
Noteworthy numbers. The amount of BTC that MicroStrategy added to its balance sheet last month, and other key stats to know this week.
CRYPTO WORLDWIDE
How Bitcoin is driving crypto adoption and financial access across Africa
One of Bitcoin’s core use-cases is the ability to move money quickly and cheaply without any intermediaries. In Africa, where sending money — within and across borders — can be complicated, Bitcoin and crypto technology have been making a difference for large populations without access to the traditional banking system.
Now, a new generation of entrepreneurs in countries including Nigeria, Ghana, and South Africa are looking to accelerate the use of crypto by creating payment and banking alternatives using Bitcoin, stablecoins, and other blockchain tech. Let’s dig in.
Roughly 50% of African citizens don’t have banking access, making Bitcoin an attractive alternative.
To fill the banking gap, cellular companies have built a patchwork system around mobile wallets and payments tied to phone numbers — but most of these systems aren’t interoperable, and sending or receiving money from abroad often means high fees or running into government currency controls.
“If someone wants to move money to the country next door, normally, you’d have to fill up a suitcase full of cash and move it over the border,” said Ray Youssef, CEO of Paxful, a peer-to-peer BTC exchange.
These pain points are a major reason Sub-Saharan Africa is among the fastest growing crypto markets on earth, with 6% of all transactions being peer-to-peer, more than double the share of the next closest region. Another big reason: inflation. Many countries, including Nigeria, Ghana, Sudan, and Ethiopia struggle with high currency inflation, making crypto a viable alternative.
In 2022, Paxful saw 140% year-over-year growth in remittance payments in Kenya and 55% growth in Nigeria. Nigerians are also increasingly using BTC to import goods from abroad due to currency controls from the government. (Read Coinbase’s recommendation to the White House to further study the benefits of crypto remittances.)
Bitcoin’s Lightning Network is key to making BTC more accessible
While BTC payments can be much faster and cheaper than international transfers via companies like Western Union, Bitcoin’s network can see transaction speeds slow down and fees spike during periods of high traffic.
This is where the Lightning Network comes in — Bitcoin’s layer 2 scaling solution moves transactions off the main blockchain, which lowers fees and improves speed, even during periods of high network demand.
Bitnob, a Nigeria-based crypto startup, is using the Lightning Network to enable cheap international transactions that settle in local currencies, and uses the Bitcoin network to move the money across borders. “We’re able to settle into bank accounts or mobile money accounts, without the recipients having to interact with bitcoin themselves,” co-founder Bernard Parah explained to CNBC.
One developer has even created ways to access BTC without the internet.
South African developer Kgothatso Ngako built a Lightning Network-enabled wallet that enables anyone with a basic phone — no smartphone or WiFi required — to transact with BTC via text message. Right now, around 3,000 users across eight countries including Uganda, Kenya, South Africa, and Nigeria are using the wallet, dubbed Machankura, which is South African slang for “money.” But with an estimated 3 billion people without internet access globally, Ngako told Decrypt he sees plenty of room for growth: “I believe the tool could help Bitcoin the un-Bitcoined.”
Why it matters... It can be easy, amid all the regulatory headlines of the past few months, to equate crypto solely with the news and debates taking place in the United States. But crypto is global and borderless, and the adoption trends across Africa are affirming many of Bitcoin’s founding use cases. “In 10 years or so,” Marius Reitz, general manager for Africa at crypto exchange Luno, told Coindesk, “Bitcoin could become a regional currency or it could even become a common currency across the African Union.”
IN BRIEF
Why did the CFTC just sue Binance? A quick breakdown.
On Monday, the U.S Commodity Futures Trading Commission (CFTC) unveiled charges against Binance and its CEO Changpeng Zhao (CZ) which alleged a host of violations ranging from offering unregistered trading products in the U.S. to knowingly evading U.S. rules that prevent illicit financial activity.
In a 74-page document, the CFTC, which oversees U.S. derivatives markets, claimed Binance failed to properly register itself in the U.S. and illegally provided derivatives-based trading for things like futures and options for bitcoin, ether, and litecoin. (Notably, the CFTC’s suit categorizes BTC, ETH, and LTC as commodities and not securities.)
The suit also alleges that Binance failed to operate adequate programs to prevent money laundering and law-evasion, and even “instructed U.S. customers to evade such controls by using [VPNs] to conceal their true location.”
In response to the suit, CZ wrote a blog post, in which he called the CFTC’s complaint “unexpected and disappointing” and “an incomplete recitation of facts.”
As a civil regulator, the CFTC could seek to levy fines and permanently ban Binance from operating in the U.S.
The news quickly sent ripples through markets, driving BTC’s price down by about 3% within minutes of the disclosure, though it rebounded on Tuesday.
NUMBERS TO KNOW
405 quintillion
The estimated number of hashes per second reached on the Bitcoin network this weekend, an all-time high. Bitcoin’s hashrate is a measure of the network’s total computing (or mining) power and is considered a key security metric. When the hashrate is higher, miners use more computational power to solve the time-consuming math puzzles required to add a new block to the network.
$150 million
The approximate amount of bitcoin (6,455 BTC) that MicroStrategy, the largest corporate holder of BTC, purchased over the last month, per new regulatory filings. The software company has become known best for its BTC-boosting founder Michael Saylor and his strategy of acquiring as much BTC as possible. Right now, MicroStrategy holds 138,955 BTC (worth about $4 billion) on its balance sheet. For comparison, the second largest corporate holder of BTC is Marathon Digital, with 12,232 BTC.
$500,000
The reward that the Ethereum Foundation is offering to developers who are able to identify any vulnerabilities related to Ethereum’s next upgrade before it is scheduled to go live on April 12. The Shanghai-Capella, or Shappella, upgrade is the most significant Ethereum update since last year’s Merge, and will include the ability to withdraw staked ETH for the first time.
77 ETH
The value (about $130,000) of CryptoPunk #685, which NFT Trader Brandon Riley recently purchased and then accidentally “burned,” permanently removing from circulation one of the 10,000 punks that comprise the pioneering NFT collection. In an attempt to wrap CryptoPunk #685 to earn some extra yield, he mistakenly sent it to a burn address — a digital wallet without a private key and that cannot be accessed.
DISCLAIMER
This material is the property of Coinbase, Inc., its parent and affiliates (“Coinbase”). The views and opinions expressed herein are those of the author and do not necessarily reflect the views of Coinbase or its employees and summarizes information and articles with respect to cryptocurrencies or related topics that the author believes may be of interest.
TOKEN TRIVIA
What is Bitcoin’s maximum supply?
A
50 million
B
There is no maximum supply
C
21 million
D
12 billion
Find the answer below.
Trivia Answer
C
21 million
