Bitcoin Adoption in Africa Driven by 30% Unemployment, Cyber Fraud, and Economic Scarcity

In the past year, interactions with Bitcoin users across Africa have revealed a diverse range of perspectives on the cryptocurrency, shaped by the unique economic and social contexts of the continent. Three key themes—scarcity versus abundance, trust versus distrust, and risk versus opportunity—emerge as defining factors in how individuals engage with Bitcoin.

Scarcity is a significant issue in Africa, where regulatory environments often stifle business growth, leading to high youth unemployment rates. In some regions, unemployment reaches 30%, and in Kenya, it is as high as 67%. This economic scarcity drives many to seek alternative financial solutions, including Bitcoin. The question of how to make money in Bitcoin is common, with answers ranging from seeking employment in Bitcoin-related companies to engaging in peer-to-peer markets for arbitrage opportunities. Bitcoin Dada, for example, has successfully trained eight cohorts of students, some of whom have secured roles in the global Bitcoin ecosystem. Others use Bitcoin for its frictionless payment methods, particularly for gig work.

Trust is another critical factor influencing Bitcoin adoption. In an era of cyber fraud, where financial institutions face significant challenges in maintaining trust, Bitcoin offers a decentralized alternative. Cybercrime cost Kenya $83 million in 2023 and could cost African countries up to 10% of their GDP. Traditional financial systems, while offering convenience and security, are centralized, making them attractive targets for fraud. Bitcoin's secure infrastructure and 24/7 liquidity provide a sense of control and privacy that traditional systems often lack. This trust bias leads some to adopt Bitcoin out of distrust in centralized financial systems, while others remain skeptical due to its lack of integration with existing financial infrastructure.

Risk is an inevitable part of financial decision-making, and Bitcoin is no exception. Currencies losing value over time directly impacts people's lives and businesses, with salaries often failing to keep up with inflation. External debt, which Africa owes about $1.8 trillion in public and external debt, adds to the strain of unemployment. Bitcoin's appeal in jurisdictions that do not tax it lies in its potential to offer relief from taxation. However, price volatility in Bitcoin deters some who view it as a gamble. The probability of Bitcoin going to zero diminishes with each day of its growth in adoption. Recognized as a store of value globally, Bitcoin supports circular economies and is used for cross-border payments. The psychology of money affects Bitcoin users, who tend to embrace risk and use it as an alternative means to create financial freedom. Those who hesitate to adopt Bitcoin do so out of risk aversion and the learning curve associated with its use.

As a 16-year-old asset class, Bitcoin will continue to face scrutiny and tests as adoption grows. The diverse perspectives on Bitcoin in Africa highlight the complex interplay between economic conditions, trust in financial systems, and the willingness to embrace risk. Understanding these dynamics is crucial for predicting the future of Bitcoin and its role in the global financial landscape.