Kenya pushes ahead of Nigeria in global crypto adoption

Kenya occupies the fifth position on a global cryptocurrency adoption ranking by Chainalysis to become the top country in Africa, ahead of Nigeria in 2021.

Kenya which had a 0.28 score on the global index ahead of 6th placed Nigeria with a score of 0.26, also beat off the competition on the continent in two out of three metrics.

The 2021 Global Crypto Adoption Index ranked 154 countries under three metrics including the on-chain cryptocurrency value received, weighted by purchasing power parity (PPP) per capita; on-chain retail value transferred, weighted by PPP per capita; and peer-to-peer (P2P) exchange trade volume, weighted by PPP per capita and the number of internet users.

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Kenya emerged the highest in the first two metrics, the on-chain cryptocurrency value received, weighted by purchasing power parity (PPP) per capita, and on-chain retail value transferred, weighted by PPP per capita.

“Several countries in emerging markets, including Kenya, Nigeria, Vietnam, and Venezuela rank high on our index in large part because they have huge transaction volumes on peer-to-peer (P2P) platforms when adjusted for PPP per capita and internet-using population,” the Chainalysis report read. “Our interviews with experts in these countries revealed that many residents use P2P cryptocurrency exchanges as their primary on-ramp into cryptocurrency, often because they don’t have access to centralised exchanges.”

Total global crypto adoption at the end of the second quarter (Q2) of 2020 stood at 2.5 based on a summed-up country index score. At the end of Q2 2021, that total score stands at 24, suggesting that global adoption has grown by over 2300 percent since the third quarter of 2019 and over 881 percent in the last year.

The research suggests that the reasons for this increased adoption differ from country to country – in emerging markets, many turn to cryptocurrency to preserve their savings in the face of currency devaluation, send and receive remittances, and carry out business transactions. Adoption in North America, Western Europe, and Eastern Asia over the last year has been driven mainly by institutional investment.

These reasons according to the research are compelling given that the market has experienced its biggest price spikes in 2021.

The significant currency devaluation that many countries in the emerging markets face also drives many residents to buy cryptocurrency on P2P platforms in order to preserve their savings. Others in these markets use cryptocurrency to carry out international transactions, either for individual remittances or for commercial use cases, such as purchasing goods to import and sell.

Many emerging markets also place limits on the amount of the local currency that residents can move out of the country. In that case, cryptocurrency also gives those residents a way to circumvent those limits so that they can meet their financial needs.

In all cryptocurrency usage in the developed world and in countries that already had substantial adoption is being driven by growing transaction volume for centralised services and the explosive growth of DeFi.

“Our biggest question for the next twelve months is how much adoption will continue on those platform categories compared to new and emerging models we haven’t seen yet. The clear takeaway though is cryptocurrency adoption has skyrocketed in the last twelve months, and the variation in the countries contributing to that show that cryptocurrency is a truly global phenomenon,” Chainalysis said.