Africa and the Middle East Are Emerging As Growth Areas for Bitcoin.

Bitcoin is hard money based on a decentralized system, which gives it a global dimension. Bitcoin transcends borders. When one area like Europe grows less quickly, another can take over. Starting with North Africa and the Middle East, which are currently driving the growth of Bitcoin.

The American continent (North and South) continues to show sustained growth in its crypto transactions, according to Chainalysis' 12-month (July 2021-June 2022) review. But it is the North Africa and Middle East region, still modest in size, that is the most dynamic, with a 48% jump in activity, three times more than Europe (15%).

While Dubai has ambitions to become a regional hub for transactions in the cryptocurrency world, it is not alone. Saudi Arabia and Abu Dhabi want to capture the interest of a wealthy population looking for diversification and returns.

Bitcoin is seen as a hedge against inflation

In total, people in the 25 countries of North Africa and the Middle East received $566 billion in cryptos (Bitcoin, Ethereum ...) in twelve months. This period coincided with a fall in the markets, but since June 30, 2022, the prices have regained 19%. This has made them $107 billion if they have not sold their cryptocurrencies to recover the cash.

More than two-thirds of this amount was captured by five countries: first is Turkey (200 billion), followed by Lebanon, Saudi Arabia, Egypt, and the United Arab Emirates. Three of them (Turkey, Lebanon, and Egypt) are going through serious crises. Their inhabitants have lost confidence in their currencies.

Against the backdrop of the economic crisis and devaluation, the Egyptian pound fell by 20% against the US dollar in 2022. The two main cryptocurrencies, Bitcoin and Ethereum, have fallen three times more (60%) this year. Despite this, crypto money transfers from abroad (family, relatives) to Egypt have been significant. The country has seen the strongest growth in the area, at 221.7%.

A refuge from inflation and the fall of their currency, Bitcoin can be a way to shelter savings in the event of a political crisis or when faced with the risk of having their money confiscated or rationed. The month after the Taliban came to power, cryptocurrency flows in Afghanistan increased fivefold, peaking at over $150 million in September 2021.

Since the regime's ban on Bitcoin and arrests in the country, however, activity has plummeted to just under $80,000 per month.

Between ban and tolerance

The three main areas (Asia, America, and Europe) take 90% of global transactions in amount exchanged, the Middle East, around 7%, and Africa, 3%. Changpeng Zhao, the CEO of Binance, the world's leading platform, thus recently pointed out that in Africa, where only 11% of the population has a bank account, “the number of potential users is very large, but the overall amounts in cryptocurrencies are still small.

Bitcoin has become the second official currency of Central Africa along with the CFA franc, but this remains an exception. Apart from a few cases (Central African Republic, Kenya, South Africa), governments in African countries are not very open to Bitcoin and cryptocurrencies, unlike their populations. And it's easy to see why, since Bitcoin's values of freedom and self-sovereignty are perceived as dangerous by leaders who are more corrupt than others!

The most closed are Algeria, Tunisia, and Morocco, which was the first to ban cryptocurrencies back in 2017, but could in the future relax its legislation. The other African countries tolerate their citizens buying Bitcoin and cryptocurrencies, but they block Bitcoin's access to their banking and financial system. In Latin America, the legislation is much more welcoming, and most countries, with very few exceptions (Bolivia), are not hostile to Bitcoin.

To learn more about the subject, feel free to read for yourself Chainalysis' blog post on the subject.

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