09:05 ▪ 3 min read ▪ Written by Eddie S.
Stablecoin adoption is on the rise in Sub-Saharan Africa, a trend primarily driven by ongoing local currency devaluations, particularly in Nigeria and Ethiopia. According to a recent report by Chainalysis, stablecoin trading currently accounts for 43% of total crypto trading in the region.
Currency devaluation: a key factor in the adoption of cryptocurrencies
The devaluation of local currencies has led many individuals and businesses to seek more stable alternatives to protect their wealth. Stablecoins, cryptocurrencies backed by stable assets like the US dollar, offer an attractive solution. These help avoid extreme fluctuations in the local currency and preserve the value of financial assets.
For example, Nigeria remains a global leader in cryptocurrency adoption, with approximately $59 billion in transactions between July 2023 and June 2024. Approximately 85% of remittances, primarily to individuals and professionals, are less than $1 million. The devaluation of the Naira has further reinforced this trend.
Ranked 26th in cryptocurrency adoption, Ethiopia has the fastest growing stablecoin market in Africa, increasing by 180% year-on-year. In July, the bull lost 30% of its value after monetary restrictions were eased to gain support from the IMF.
Future outlook
Eric Jardine, head of cybercrime research at Chainalysis, explained that the adoption of stablecoins is closely tied to the devaluation of local currencies. He added that adoption of this cryptocurrency could increase rapidly whenever the local currency loses value, but could also increase outside of such situations.
There is a similar trend in South Africa, where institutional investors say stablecoins are a “game changer” for managing liquidity and reducing the impact of currency volatility.
In conclusion, the financial landscape in sub-Saharan Africa is changing with currency devaluation leading to the introduction of stablecoins. This cryptocurrency trend promises to increase economic stability and provide a viable solution to the region’s monetary problems.
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Eddie S.
Adapt to society and live a safe life to survive in universities around the world. Community managers manage the underlying cryptocurrencies and work on blockchain and its development. Experience and fair management should be passionately considered in the domain and article information and contract.
Disclaimer
The views, ideas and opinions expressed in this article are solely those of the author and should not be construed as investment advice. Please do your own research before making any investment decisions.
