Kenya Overtakes Nigeria in Global Crypto Adoption

Kenya has been ranked higher than Nigeria to be the top country in Africa for cryptocurrency adoption, according to data from Chainalysis.

In the 2021 Global Crypto Adoption Index, Kenya ranked 5th globally with a 0.28 score on the global index, just above Nigeria which had 0.26 in sixth place.

The 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.

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 has been driven mainly by institutional investments over the last year.

These reasons according to the research are compelling given that the market has experienced its biggest price spikes in 2021. Countries such as Nigeria have been facing serious currency devaluation, causing people to take refuge in cryptocurrencies to preserve the value of their savings.

“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.

Also, people from these emerging markets now use cryptocurrency to carry out international transactions, either for individual remittances or for commercial use cases, such as purchasing goods to import and sell. This has helped them beat the limitations in the systems such as restricted transaction volumes and long transaction procedures.

On the other hand, the developed world countries that already had substantial adoption of cryptocurrencies are still gaining momentum due to the growing transaction volume for centralised services and the explosive growth of Decentralised Finance (DeFi).