Cryptocurrency trading is the buying and selling of cryptocurrencies on exchange platforms such as Binance, Coinbase and Paxful.
Usually, traders want to buy digital currencies with the hope that they will increase in value and then sell and capitalize on the profits.
There are more than 12,000 cryptocurrencies available by 2022, all with different characteristics and qualities that traders tend to investigate for investment. It’s not that far from investing in stocks or shares.
Africa’s cryptocurrency centralized exchange trading accounts for less than 1% of global spot and derivatives trading.
Although Africa lags behind the rest of the world in cryptocurrency trading and adoption, the continent has some of the fastest growing markets for holders in countries such as Nigeria, Morocco, Tanzania, Kenya, Togo, Ghana and South Africa. as hotspots for this activity.
Nevertheless, cryptocurrency trading in Africa faces a number of obstacles that it is hoped will be resolved and encourage more people to adopt and trade.
Below is a breakdown of the obstacles:
1.) Scams and Fraud
Perhaps the biggest obstacle to crypto trading is people’s fear of losing their investments to scammers and fraudsters.
Crypto activity on the continent has been linked to these negative experiences that seep into the minds of ordinary Africans based on conversations on the ground.
While some understand that cryptocurrencies are not designed to steal their funds, they are unsure of the security and safeguards that platforms and exchanges need to protect their funds.
Worst of all are the bad practices in the industry that have seen major exchanges like FTX collapse with traders’ funds. Apparently the industry is not very reliable, especially with funds that are electronic in nature.
2.) Lack of suitable trading platforms
There are hundreds of cryptocurrency trading platforms out there, but some enthusiasts believe that the best platforms don’t really meet the needs of traders in Africa.
The concern is that some of these exchanges do not offer fast fiat currency withdrawals to local bank accounts.
For example, it is not easy to open a residential account to store dollars in Nigeria. Most people are attached to the whole concept of cryptocurrency trading as exchanges do not have payment methods suitable for the average African.
3.) High trading fees
Trading fees refer to exchange platform fees such as deposit and withdrawal fees.
Crypto trading platforms usually receive these payments in US Dollars and we cannot deny that most African countries, such as Nigeria, have experienced a significant drop in their currencies. In the third quarter of 2022, the Naira depreciated by 22.4 percent.
With the high exchange rate between the Naira and the US Dollar, the average Nigerian cannot afford the extravagant trading fees charged in dollars.
4.) Transaction speeds
Contrary to the promise of fast transactions, a transaction on a conventional cryptocurrency trading platform can take anywhere from 10 minutes to hours, or even a whole day, on certain platforms. This is one of the reasons why people are hesitant to accept crypto payments or even trade cryptocurrencies in general.
Transaction speed depends on which cryptocurrency you are trading and it also depends on the amount of network fee paid. But apart from the confirmation time from blockchain networks, trading platforms are slow, especially when it comes to withdrawals.
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5.) Complexity of crypto trading
Although cryptocurrency is meant to be accessible to everyone, trading crypto is not easy.
According to the people we interviewed, when people think of cryptocurrency trading, they think of red and green line charts and thus get discouraged by its supposed complexity.
It can be quite scary and confusing when you open a trading software for the first time and you are faced with a rather complicated interface and you have to go through a long process to start your transaction. Therefore, most people leave it because it is very difficult to manage.
These are some of the barriers that, if addressed, could help sustain trade and adoption in Africa.
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