Cryptocurrency Exchange Exploration of the African Crypto Market: Favoring Stablecoins and Desiring Success Amidst Gaps

USDT and CoinCrypto Exchange P2P Are Widely Popular

I asked the same set of questions at every event:

Who pays salaries with cryptocurrency?

Who pays salaries in local currency?

Who prefers to pay in Bitcoin/Ethereum?

Who prefers stablecoins?

Who actively uses CoinCrypto Exchange’s P2P market?

Across all events, almost all participants’ answers were quite consistent:

They have received salaries in cryptocurrency before.

They prefer to pay in stablecoins, especially USDT.

They use CoinCrypto Exchange’s P2P market to convert stablecoins to local currency (and vice versa).

There’s little interest in holding assets like Bitcoin or Ethereum locally. Additionally, participants prefer trading on networks like Tron or CoinCrypto Exchange Smart Chain.

The reason is: almost no fees and confirmation times are “fast.”

CoinCrypto Exchange is very popular

Although competitors like onboard are emerging, almost all participants still rely on CoinCrypto Exchange as their preferred trading platform.

Someone explained to me that CoinCrypto Exchange entered Africa around 2018 and established a CoinCrypto Exchange Labs. There was potential interest at the time, but no expansion plans. Over time, CoinCrypto Exchange realized Africans wanted access to stablecoins, making Africa an important market. I’ve seen some locals wearing CoinCrypto Exchange shirts, but they’ve never worked for the company.

For me, the rise of USDT seems coincidental. In 2018, the stablecoin market had no competitors, and Africa appeared to follow broader market trends, with USDT surpassing Bitcoin as the most liquid and traded asset. I wish I had asked more about why they preferred USDT over USDC back then.

Cryptocurrency represents an easy way to access stablecoins

The rise of stablecoins is undeniable. From an African perspective, stablecoins represent the most significant innovation.

It conveniently allows Africans to access USD:

Bypassing local black markets.

No longer facing the real dangers associated with black markets.

Exchanging at broader market rates.

More importantly, no need to hide USD under mattresses—everything is digital. Of course, making stablecoins widely adopted isn’t easy.

Some readers might think: “Well, if I can represent USD as an on-chain asset, problem solved!”

That’s the first step. The bigger challenge is creating an online marketplace that facilitates liquidity between stablecoins and local currencies. This market must support large-scale exchanges with minimal slippage.

Why is this a real challenge? Africa has about 42 different currencies. We need to cultivate a liquid market that enables conversions between all local currencies and stablecoins. This requires the joint effort of many local participants.

Fortunately, crypto systems excel at enabling participants to cooperate and provide liquidity when truly needed.

So far, this has worked well in Kenya and Nigeria. I don’t have data to confirm it applies to all 42 African currencies.

Why choose stablecoins instead of other crypto assets?

It may surprise many, but local currencies in Africa depreciate very quickly against the USD. Some currencies, like Zimbabwe’s, have failed due to hyperinflation.

For example, since 2008:

The Nigerian Naira has depreciated about 7/8 against USD.

The Kenyan Shilling has depreciated 50%.

The depreciation of the Kenyan Shilling is significant, especially considering that from 2008 to 2023, Kenya’s GDP doubled. Despite economic growth, the currency continued to depreciate. Confidence in the economy increased, but confidence in the local currency did not.

Undoubtedly, large portions of populations in Kenya and Nigeria still live in absolute poverty.

For Westerners, especially Brits, poverty means living in an apartment with social security (welfare) payments. Families struggle to meet basic needs but have a roof over their heads and access to healthcare. Considering the homeless, the UK has about 271,000 people, or 0.4% of the total population (~67 million).

It’s estimated that 60% of Nairobi’s population lives in slums. Additionally, the World Bank estimates about 50% of Nigeria and Kenya’s populations live in slums.

In slums, entire families may live in a single room (“studio”). Outside their door is a narrow corridor connecting them to the main road. As we’ve seen, sewage flows through these narrow corridors, like a treacherous obstacle course. Many live on less than $1 a day with almost no social welfare.

This is why the following statement is disconnected from reality for Africans, especially those living in slums:

“Real victory lies in helping people understand why Bitcoin is the best long-term store of value.”

I don’t like criticizing this statement, but it’s out of touch with the real-world situation and the realities faced by locals.

I believe locals are very willing to have long-term savings goals, but they urgently need to address immediate expenses. For example, if they can’t pay bills for any reason, a landlord might pay $10 to a group of young people to threaten tenants into paying rent.

Surprisingly, slums still have landlords.

I don’t believe stablecoins can help those living in slums. The solution is to create better market conditions locally, enabling them to build wealth, improve infrastructure, and escape poverty. I understand individuals might seek online work and receive payments via crypto, but for many living under these conditions, it’s not an immediate solution.

In other words, crypto systems are not yet relevant for about 50% of Nigeria or Kenya’s populations outside exceptional cases.

Africans using stablecoins are not living in slums. I imagine they have achieved some form of financial stability and can cover recent expenses.

Over time, the USD is losing its purchasing power. We should keep all savings in native crypto assets; this crypto meme doesn’t mean much to them because it’s a foreign concept.

The situation in Africa is quite the opposite. The USD’s purchasing power only rises relative to their local currencies. Compared to holding local crypto assets, holding USD is a more “full crypto exchange” choice.

For Africans, USD is very stable, which is why stablecoins have found product-market fit among them.

The demographics at the conference include:

Community leaders,

Software developers,

Startup founders.

Eager to succeed amid discrimination and mistrust

The following questions and answers are from a gathering in Nigeria.

Who doubts online payment providers like PayPal?

Everyone in the audience raised their hand, and we all laughed.

In Africa (especially Nigeria), online services often lock users out because their IP addresses are considered suspicious. Some of us have also been locked out of our accounts.

The end result: Africans are excluded from services offered by global fintech companies, which we take for granted in the West.

Who doubts KYC?

We were told about 70% of Nigerians don’t have passports.

The Nigerian government has a scheme called the National Identity Number (NIN) for identity verification and KYC, but it’s plagued with issues and delays.

Meanwhile, the Central Bank of Nigeria runs an independent identity verification process called Bank Verification Number (BVN). It acts as a unique identifier across banking services. Only about 25% of Nigerians (~57 million) have registered for it.

In Nigeria, identity remains a challenge. This affects companies’ ability to meet compliance requirements before sending funds to Nigerians. Whether via crypto or other means, this identity issue must be addressed within a regulatory framework.

Who missed opportunities because of mistrust?

No one laughed this time. Everyone raised their hand, and it was eye-opening.

If there’s one takeaway for readers, it’s that blockchain technology—especially Rollup as a tech stack—is so important for our colleagues in Africa. It reduces power dynamics between users and operators, enabling parties who want to transact but distrust each other to do so in a fully crypto way.

In other words, it allows users:

To lock funds in operator services,

To interact with services,

And ultimately withdraw funds without trusting the service provider.

We can define, measure, and reduce trust in financial interactions—that’s what makes crypto so special. I call it the trust engineering field.

I hope one day the tech stack can bring scale benefits to our colleagues.

Let’s transact on their platform, pay for their services, and most importantly, not worry about who they are or where they live.

What should we tell the West about Nigerians?

A participant and others gave a deep speech on this question. Here are the key points I summarized:

“Nigerians are especially eager for opportunities. They are driven by motivation. Design the right incentive schemes, and Nigerians will join. Nigerians learn everything they know from the internet. Give them a Nokia 3310, and they will use it as a tool to go somewhere.

They want to escape their local environment, work online, and join the global workforce. They see blockchain as a great equalizer. It allows them to earn based on ability, not location.

In Africa, projects require less funding to succeed. For every $1 spent in the US/Europe, you get 1 point; in Africa, you get 1000 points.”

And:

“If there are Nigerians in a project, there’s money to be made. If not, be cautious.” – Local Kenyan

I smiled, but it truly reflects their desire to succeed.

Web3 Bridge

Please take a moment to imagine:

Leaving family and friends for 16 weeks to learn Web3, traveling thousands of kilometers, sharing a dorm with 40 others.

Hoping for a life-changing opportunity.

This opportunity is online work, earning based on ability, and not discriminated against by your location.

This is Web3 Bridge.

Web3 Bridge is a free educational program running since 2019.

It attracts Web2 developers and aspiring programmers eager to learn how to enter the Web3 industry.

We met a woman who left her husband and three children at home to participate. I imagine many others face similar dilemmas—long separation from loved ones, and that kind of courage is remarkable.

The courses and topics covered are impressive. They start with basics like what is blockchain, then how to deploy your first Solidity (or Cairo) smart contract, and then full-stack development for Web3 apps.

Again, the entire program is free, whether in person or online. We understand that Web3 Bridge’s sustainability depends on grants from founders and personal investments (time and money).

Currently, physical facilities include several houses, but founder Ayo shared his dream. He wants to buy nearby land and open a larger campus. With more space, he can increase student capacity, teaching hundreds of developers at once.

I sincerely hope his vision comes true. The crypto community should consider how to support Web3 Bridge.

What’s next?

During nine days visiting Kenya and Nigeria, I gained valuable insights that lead me to some key conclusions about their workforce, the role crypto might play, and whether we (the West) can support their growth.

Africa has unique advantages for success

In my view:

Africans share the same time zone as Europeans,

They speak European languages fluently, especially English and French,

They have a strong desire for success and wealth creation.

Africans are well-positioned in the digital race.

In the digital realm, if a job requires a specific time zone and they can communicate in the same language, whether the worker is in Europe or Africa may not matter.

My overall goal to help Africans succeed is:

To provide better crypto infrastructure, offering reliable ways to hire and pay Africans,

To reduce key differences in online communities that distinguish Africans from Europeans,

To enable African developers to leverage crypto as a software stack and eliminate the trust role of service operators.

Long-term: Africans and Europeans should become indistinguishable in the digital space.

Only then can Africans mainly rely on their own abilities rather than geography for income.

Africans understand cryptocurrency

Thanks to the internet and online communities, Africans are not isolated from the Ethereum community. We met the following teams and individuals:

Teams building on Arbitrum,

Participants in ETHGlobal hackathons who won awards,

People learning how to implement Cairo smart contracts on StarkNet.

Familiar with retrospective funding from Optimism,

Eager to learn zero-knowledge proofs.

Africans don’t need us to visit and tell them why they should care about Ethereum or the broader crypto ecosystem.

They have a large NFT community.

Africans are already interested in crypto, and the number of enthusiasts is steadily growing.

How can we help Africa?

In terms of understanding how to use crypto, Africans don’t need our help. If anything, we need their help to showcase use cases.

As outlined, how Africans conveniently use crypto to access USD helps validate all the tech we’re building. It’s irrefutable evidence that crypto has product-market fit and many depend on it.

On the other hand, we need to better understand the challenges Africans face before participating in the online economy and starting their own crypto projects. Some challenges include:

Lack of government support.

Kenya has no crypto laws, but the government recently confiscated WorldCoin hardware, citing undisclosed intentions. Nigeria bans bank involvement, but individuals can still use crypto.

Almost no venture capital exists.

Angel investing is possible but very rare. Identity issues make legal compliance difficult and may hinder fundraising.

No time to build.

The desire to succeed makes Africans highly focused on building the next product. They have no leisure to tinker with tech just for fun, which could affect their ability to innovate.

Global perceptions.

Westerners often misunderstand Africans’ capabilities and realities. Africans can demonstrate their skills and value, but it requires us all to amplify it.

Africa’s grant programs

Repeatedly, the solution proposed is a dedicated grant program for Africa. Regarding grants, I’d like to offer some points relevant to any program (not just those focused on Africa):

Grants should go to projects and individuals that need to push progress,

Grants should support those who can benefit from tinkering and better understand research-driven ideas,

Grants can reduce early-stage risks for venture capital,

Grants shouldn’t be seen as long-term funding because it’s easy to keep funding projects that should fail,

Grants should only be awarded when recipients have clear work proof,

Grants can foster environments, connect developers, and grow communities for knowledge sharing.

Any grant program aimed at Africa or any region needs local leaders to operate it. Grant managers can be paid to review and approve grants. This can be a full-time role.

Most people, even outstanding local leaders, lack experience in running or participating in grant programs. Like any system, it’s best to start small and build gradually over time. It’s better not to entrust a very large fund to a brand-new grant program. Grant managers should have time to earn their reputation managing funds and demonstrating impact.

Grants don’t solve local problems, especially in Africa. Funds are limited and can be quickly exhausted. Use funds cautiously. Grants should be reserved for the most promising groups and individuals to advance their projects. It’s “free” money, but it shouldn’t be widely distributed.

For me, Uniswap is one of the most successful examples. Founder Hayden received a $50,000 grant from the Ethereum Foundation to cover audit costs. That was enough to pay for audits, push progress, and help build the current giant, Uniswap.

Advancing progress doesn’t require huge sums. Less is more.

Finally, two issues hinder any grant program’s success:

If Africans can’t comply with KYC/AML rules, they might not receive grants.

A local venture network needs to emerge to fund successful cases later.

Both are structural and infrastructure issues beyond crypto itself. Especially the venture network—you need willing investors to fund and help new founders build large, sustainable companies.

On-site education

One thing Africa lacks that the West has in abundance is on-site education.

In the West, there are many workshops, summer and winter schools to attend and learn core crypto technologies. More importantly, many educational activities are free.

Unfortunately, many Africans face barriers to participating in crypto-related events.

Many lack passports, and even with passports, visa requirements and travel costs pose significant challenges.

They can’t come here in person.

As an experiment, Ye Zhang and I held developer workshops in Kenya and Nigeria.

Surprisingly, many software developers attended, and the turnout exceeded expectations. They asked many good technical questions. Africa has a large pool of skilled developers eager to learn Ethereum’s core infrastructure and innovative topics like zero-knowledge proofs.

So far, they rely entirely on the internet for learning, but face-to-face interaction with global experts is best. It’s not just for learning; it also inspires pursuit of a topic, as experts tend to love their craft, and that intellectual passion is contagious.

This makes me think of the next step: we don’t really need a conference to promote and market new Web3 projects to Africans. People want to share knowledge and learn.

Our biggest contribution is organizing and running an on-site education program. Like a summer school—inviting experts to teach technical topics.

Final conclusions

Several key points from the above article:

Crypto payments have become a convenient way to access USD.

Due to early expansion and promoting P2P markets, CoinCrypto Exchange is very popular in Africa.

Africans want to earn based on ability, not location, and they are persistent in pursuing it.

The long-term goal should be to reduce the gap between Europeans and Africans in the digital space.

Africans face many challenges, including lack of regulatory support, inability to travel, difficulty with KYC/AML compliance, almost no venture capital network, and no time to try new ideas.

More importantly, almost all Nigerians admit they’ve missed opportunities because of mistrust.

Web3 Bridge’s educational programs are doing important work, and the next step is Western countries to help run summer schools in person.

An impactful outcome of our visits is helping communities connect. Many participants don’t know each other, especially developers. It sounds like some local community leaders will try to organize more events. As our visits increase, we hope to help local leaders build larger communities.

There are two final topics I want to discuss.

Africans love life. Although we’ve only been to Nigeria and Kenya, we also met Africans from Uganda, Ghana, and other countries. They joke happily—like Nigerians are very dramatic, or they go to Ghana to relax.

Locals are very willing to teach me interesting words like Mubaba, Alagba, m’soupa—praises for men and women. I seize every chance to say these words; most times, they laugh, especially Kenyans. They even told me East Africans have round foreheads, while West Africans have flat ones.

As a programmer, it’s easy to focus on broader systems and try to assess how to fix them for everyone’s benefit. But we must never forget that the core of the system is people. Spending time understanding their customs, humor, and appreciating what they give up to be in the same room with us is always worthwhile.

What is Africa?

One striking aspect of Africa is its immense cultural richness and how it influences Africans’ views of the continent.

In West Africa, there’s a Schengen-like agreement allowing visa-free travel among several countries. But traveling from East Africa to West Africa (and vice versa) is uncommon and difficult. It requires visas, high costs, and time. For example, a flight from Lagos to Nairobi takes about 5 hours, with round-trip tickets over $600.

I’ve noticed that mutual recognition between East and West Africa is an important part of African identity. Conversely, they don’t see South Africa or North Africa as “truly African.” South Africa is considered more European, North Africa more Islamic.

This sentiment is reflected in the fact that none of the people I’ve asked have been to Algeria or expressed interest in going there. It’s interesting because my stepfather grew up in Algeria and strongly considers himself African. I don’t have a good insight into this. I imagine it relates to cultural differences and Africa’s colonial history. **$XAUT **