Crypto needs emerging markets (and in part thanks to Gary Gensler, thanks Gary) many in the Western crypto scene have started to wake up to that fact. Arguably stablecoins being the only part of crypto that has achieved retail PMF only goes to highlight the importance of emerging markets in crypto’s pursuit of achieving mass adoption (because let’s be real it’s not people in the West driving this). The continent of Africa has significant potential for crypto adoption - there’s a reason why Nigeria’s Naira was the first fiat currency that Binance supported and why it doubled down on providing local on/offramps on the continent. If we zoom in on Africa, 1 in 6 global internet users will be on the continent by 2025 and Nigeria (Africa’s most populous country) ranked 2nd in Chainalysis global crypto adoption index. Ok so what now - how do you actually scale into the continent of Africa? Previously many in the crypto scene assumed that by virtue of being a crypto project it was global in reach. In reality this isn't true. To cross the crypto-chasm we have to think, talk about and build crypto
for more than just the Western user. This is localisation 101. People in Africa engage with crypto differently to people in the US or Europe, bringing the topic of localisation in crypto. Leaning into user behaviour The first step for localisation is to recognise and understand different motivating factors behind using crypto. Whereas in the West key drivers for crypto usage are ideological, speculative (and now institutions), across Africa there is core utility for crypto due to: Limits on accessing foreign exchange to protect country’s FX reserves (especially USD)
High fees to send/ receive money at 20% vs the global average of 6%
Hedging against inflation & FX risks by storing money in less inflationary currencies such as USD to protect their wealth. Numerous businesses and individuals use stablecoins to address these challenges. In Africa stablecoins accounted for over 50% of crypto volumes in 2022 whereas in the West the utility and the benefits of stablecoins limited. Interestingly whilst in the West, USDC is viewed as the most trusted stablecoin, on the continent that position is held by USDT. Why? Simple answer: it has the highest liquidity on on/offramping platforms in Africa. USDT being first to the market and being available at affordable rates (on TRON) and being pushed by Binance has contributed to it being the dominant player on the continent. So it is clear that many in Africa aren’t wedded to the idea of crypto, but rather are wedded to stability. One smart form of localisation is leaning into user behaviour. Rather than talking about stablecoins speak of digital dollars or e-dollars. The term stablecoin after all is largely crypto jargon - very few understand what it is or how it differs from other forms of cryptocurrencies. This shift in language may open you up to more users who aren’t necessarily bullish on crypto but bullish on access to stability. Of course it is important to be transparent and very clear that your product offerings use stablecoins (+ explains what these are & how they work) but you do not have to push the concept of stablecoins, you aren’t selling the technology, you are selling the utility. Smart localisation isn’t just about using the right language or offering localised services, it also applies to the copy you use. On/offramping Whilst typically overlooked as an ‘unsexy’ aspect of defi, on/offramping is nevertheless fundamental. It shapes how individuals access your crypto project. Saying that your project can serve Nigeria for example, but not having localised and embedded on/offramps that support the Nigerian Naira, is the same as Apple saying they serve the Japanese market but people cannot buy iPhones using the Japanese Yen. In Africa peer-to-peer (P2P) on/offramps dominate. Binance P2P is the largest player in this space (and the biggest exchange) in Africa. Their early focus on building localised on/offramps that support numerous African currencies has created a strong moat for the company as whole. To crack the P2P game you must have high and reliable liquidity levels, something which Binance P2P has achieved across numerous currencies. As an early player in this space they have benefited from and created a flywheel of. P2P is arguably popular in Africa due to: Existing behaviour: in the trade-fi world P2P-esque payments is popular across the continent such as, mobile money payment systems (such as MPESA, MTN’s momo or Airtel’s mobile money) or bank transfers (accounting for over 55.6% of digital transactions in Nigeria in 2022).
Previous regulation: Some governments enacted policies which resulted in the separation of TradFi from DeFi meaning that crypto on/offramps couldn’t integrate and use traditional payment rails for on/offramping. P2P represented a regulatory neutral solution.
Underserved: Larger Western crypto on/offramp players have not typically paid much interest in or built products for Africa. Further for many traditional payment rails, facilitating and partnering with crypto on/offramps was not a priority and also a venture they wanted to approach with caution.
Easier to scale: To enter new markets, a P2P on/offramp simply needs merchant that support the local currency. They don’t need to worry about integrating with numerous local payment methods. It is important that your on/offramp supports numerous local payment methods but one important nuance is to also offer competitive exchange rates because in some countries there is an ‘official exchange rate’ as well as a ‘black market exchange rate’. A truly localised on/offramp should follow the black market rate especially as for new entrants and platforms users will continue to cross check this against more established platforms. The value of money One final point when it comes to web3 and localisation - the meaning of money and structure of the financial system varies across the world. The chains that have the lowest fees have done the best. Tron is particularly popular for buying/selling USDT despite not having any significant developer programmes on the continent. Linked to this, given lower GDP and disposable income on the continent a properly localised platform needs to be continuously optimising for affordable fees for small as well as large transactions. Essentially… For crypto to be adopted by the masses, it is time to prioritise building products focused on behaviours and needs outside of the West with more and better localisation. And remember some of these localisation methods will have global ramifications - arguably Polygon started in part to address a problem more strongly felt in India than in the West, how expensive it was to do transactions of Ethereum and yet this local problem had global applications. In the continent of Africa we are starting to see the same moves - whether than be on/offramps or infrastructure solutions pushing globally. Crypto needs emerging markets (and in part thanks to Gary Gensler, thanks Gary) many in the Western crypto scene have started to wake up to that fact. Arguably stablecoins being the only part of crypto that has achieved retail PMF only goes to highlight the importance of emerging markets in crypto’s pursuit of achieving mass adoption (because let’s be real it’s not people in the West driving this). The continent of Africa has significant potential for crypto adoption - there’s a reason why Nigeria’s Naira was the first fiat currency that Binance supported and why it doubled down on providing local on/offramps on the continent. If we zoom in on Africa, 1 in 6 global internet users will be on the continent by 2025 and Nigeria (Africa’s most populous country) ranked 2nd in Chainalysis global crypto adoption index . 1 in 6 global internet users will be on the continent by 2025 1 in 6 global internet users will be on the continent by 2025 ranked 2nd in Chainalysis global crypto adoption index ranked 2nd in Chainalysis global crypto adoption index Ok so what now - how do you actually scale into the continent of Africa? Previously many in the crypto scene assumed that by virtue of being a crypto project it was global in reach. In reality this isn't true. crypto To cross the crypto-chasm we have to think, talk about and build crypto for more than just the Western user. This is localisation 101. To cross the crypto-chasm we have to think, talk about and build crypto for more than just the Western user. This is localisation 101. People in Africa engage with crypto differently to people in the US or Europe, bringing the topic of localisation in crypto. Leaning into user behaviour Leaning into user behaviour The first step for localisation is to recognise and understand different motivating factors behind using crypto. Whereas in the West key drivers for crypto usage are ideological, speculative (and now institutions), across Africa there is core utility for crypto due to: Limits on accessing foreign exchange to protect country’s FX reserves (especially USD) High fees to send/ receive money at 20% vs the global average of 6% Hedging against inflation & FX risks by storing money in less inflationary currencies such as USD to protect their wealth. Limits on accessing foreign exchange to protect country’s FX reserves (especially USD) Limits on accessing foreign exchange High fees to send/ receive money at 20% vs the global average of 6% High fees to send/ receive money 20% 20% Hedging against inflation & FX risks by storing money in less inflationary currencies such as USD to protect their wealth. Hedging against inflation & FX risks Numerous businesses and individuals use stablecoins to address these challenges. In Africa stablecoins accounted for over 50% of crypto volumes in 2022 whereas in the West the utility and the benefits of stablecoins limited. 50% of crypto volumes 50% of crypto volumes Interestingly whilst in the West, USDC is viewed as the most trusted stablecoin, on the continent that position is held by USDT. Why? Simple answer: it has the highest liquidity on on/offramping platforms in Africa. USDT being first to the market and being available at affordable rates (on TRON) and being pushed by Binance has contributed to it being the dominant player on the continent. So it is clear that many in Africa aren’t wedded to the idea of crypto, but rather are wedded to stability. One smart form of localisation is leaning into user behaviour. Rather than talking about stablecoins speak of digital dollars or e-dollars. The term stablecoin after all is largely crypto jargon - very few understand what it is or how it differs from other forms of cryptocurrencies. This shift in language may open you up to more users who aren’t necessarily bullish on crypto but bullish on access to stability. Of course it is important to be transparent and very clear that your product offerings use stablecoins (+ explains what these are & how they work) but you do not have to push the concept of stablecoins, you aren’t selling the technology, you are selling the utility. Smart localisation isn’t just about using the right language or offering localised services, it also applies to the copy you use. On/offramping On/offramping Whilst typically overlooked as an ‘unsexy’ aspect of defi, on/offramping is nevertheless fundamental. It shapes how individuals access your crypto project. Saying that your project can serve Nigeria for example, but not having localised and embedded on/offramps that support the Nigerian Naira, is the same as Apple saying they serve the Japanese market but people cannot buy iPhones using the Japanese Yen. In Africa peer-to-peer (P2P) on/offramps dominate. Binance P2P is the largest player in this space (and the biggest exchange) in Africa. Their early focus on building localised on/offramps that support numerous African currencies has created a strong moat for the company as whole. To crack the P2P game you must have high and reliable liquidity levels, something which Binance P2P has achieved across numerous currencies. As an early player in this space they have benefited from and created a flywheel of. P2P is arguably popular in Africa due to: Existing behaviour: in the trade-fi world P2P-esque payments is popular across the continent such as, mobile money payment systems (such as MPESA, MTN’s momo or Airtel’s mobile money) or bank transfers (accounting for over 55.6% of digital transactions in Nigeria in 2022). Previous regulation: Some governments enacted policies which resulted in the separation of TradFi from DeFi meaning that crypto on/offramps couldn’t integrate and use traditional payment rails for on/offramping. P2P represented a regulatory neutral solution. Underserved: Larger Western crypto on/offramp players have not typically paid much interest in or built products for Africa. Further for many traditional payment rails, facilitating and partnering with crypto on/offramps was not a priority and also a venture they wanted to approach with caution. Easier to scale: To enter new markets, a P2P on/offramp simply needs merchant that support the local currency. They don’t need to worry about integrating with numerous local payment methods. Existing behaviour: in the trade-fi world P2P-esque payments is popular across the continent such as, mobile money payment systems (such as MPESA, MTN’s momo or Airtel’s mobile money) or bank transfers (accounting for over 55.6% of digital transactions in Nigeria in 2022 ). 55.6% of digital transactions in Nigeria in 2022 55.6% of digital transactions in Nigeria in 2022 Previous regulation: Some governments enacted policies which resulted in the separation of TradFi from DeFi meaning that crypto on/offramps couldn’t integrate and use traditional payment rails for on/offramping. P2P represented a regulatory neutral solution. Underserved: Larger Western crypto on/offramp players have not typically paid much interest in or built products for Africa. Further for many traditional payment rails, facilitating and partnering with crypto on/offramps was not a priority and also a venture they wanted to approach with caution. Easier to scale: To enter new markets, a P2P on/offramp simply needs merchant that support the local currency. They don’t need to worry about integrating with numerous local payment methods. It is important that your on/offramp supports numerous local payment methods but one important nuance is to also offer competitive exchange rates because in some countries there is an ‘official exchange rate’ as well as a ‘black market exchange rate’. A truly localised on/offramp should follow the black market rate especially as for new entrants and platforms users will continue to cross check this against more established platforms. The value of money The value of money One final point when it comes to web3 and localisation - the meaning of money and structure of the financial system varies across the world. The chains that have the lowest fees have done the best. Tron is particularly popular for buying/selling USDT despite not having any significant developer programmes on the continent. Linked to this, given lower GDP and disposable income on the continent a properly localised platform needs to be continuously optimising for affordable fees for small as well as large transactions. Essentially… For crypto to be adopted by the masses, it is time to prioritise building products focused on behaviours and needs outside of the West with more and better localisation. And remember some of these localisation methods will have global ramifications - arguably Polygon started in part to address a problem more strongly felt in India than in the West, how expensive it was to do transactions of Ethereum and yet this local problem had global applications. In the continent of Africa we are starting to see the same moves - whether than be on/offramps or infrastructure solutions pushing globally.

The is an opinion piece based on the author’s POV and does not necessarily reflect the views of HackerNoon.

Crypto ≠ One-Size-Fits-All: The Key to Driving Adoption in Africa

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