Two years after crypto excitement hit Africa, there has been a painful return to earth. Prices and trust are low, and the promise that cryptocurrencies would help Africans escape poverty now needs reexamination.

In November 2021, bitcoin (BTC) reached an all-time high value of $65,000, while ethereum (ETH) also reached an ATH of $4,815. Prices reflected market optimism, fueled in part by news in early 2021 that Tesla would accept bitcoin payments and convert part of its balance to crypto. Africa was not left out of excitement. A big part of the crypto promise for Africa was that it would bring prosperity to the continent. That promise stuck. Peer-to-peer lending platform Paxful claimed that its data showed in 2021 that Africa was leading the “global adoption of cryptocurrency.”

Bitcoin hit an all-time high in November 2021

Africa Welcomes Crypto With Open Arms

In 2018, articles like this one predicted that cryptocurrencies would find acceptance in Africa, citing hyperinflation in many African countries and the difficulty of sending money to the continent. Those predictions came to pass, and a two-year bull run followed in 2020, validating the promise of cryptocurrency prosperity. Speculative trading, holding USDT as a hedge against local currency inflation and, later, high-yield, high-yield crypto products, became popular among the crypto-conscious in Africa. The consensus was that those were the early days and prices could only go up.

Beyond cryptocurrencies, non-fungible tokens (NFTs) also captured the imagination of African creators who, until then, had not enjoyed easy access to global markets. In March 2021, TechCabal published this article about a Nigerian artist who sold $750,000 worth of NFT art that he made in Microsoft Word. In March 2022, TechCabal’s Damilare Dosunmu argued that NFTs had found their main core proponents in Africa. Here is an excerpt from his article:

“The last few days have been good for NFTs in Africa, Nigeria and Ghana to be precise. From a group of Ghanaian pallbearers who have just become millionaires to the old Nigerian street drummer who now has thousands of naira in the bank, all can see the manifestation of the promises of cryptocurrency: decentralized economy and borderless accessibility to the wealth”.

Crypto winter cools the excitement

Despite the promises of long-term wealth, cryptocurrencies have shown that they are not immune to global economic pressures. As the excitement of 2020 and 2021 faded, cryptocurrency prices began to fall, and as we all learned last year, it’s easy to be a genius in a bull market. As inflation rose globally, bitcoin prices fell and crypto startups struggled. Crypto lenders Celsius and Voyager were the first to go down, and the FTX implosion remains a huge drama. This week, a Forbes report claimed that Binance is losing assets, with $12 billion spent in less than 60 days.

Earlier in the year, Coinbase announced another round of layoffs this week, laying off 950 employees. It is similar to the situation in Nigeria, with crypto exchange Quidax laying off 25% of its workforce in November 2022, citing difficult global conditions. A few weeks later, crypto payment startup Lazerpay also laid off employees after failing to raise funds. But the biggest impact came from Nestcoin, a startup that was awarded $6.45 million to “accelerate crypto and Web3 adoption in Africa and frontier markets.” The startup laid off employees after it lost an estimated $4 million in the FTX collapse.

How will Nigerian startups weather the crypto winter?

Emmanuel Njoku, CEO of Lazerpay, believes the narrative that cryptocurrencies would bring wealth to Africans is misconstrued. “People interpret the promise of wealth from cryptocurrencies to mean an increase in the price of ETH or BTC. What cryptocurrencies will do for Africans is give us the freedom to earn money. Thanks to cryptocurrencies we have access to a global economy; the argument is that it can be built for the world”.

However, he does admit to the hurdles crypto startups in Africa now face with a loss of confidence due to incidents like the FTX implosion. “Current market conditions are a wake-up call for people in crypto to think about building real use cases. We are past the hype phase. Building utilities and use cases is the stage in which we find ourselves”.

Where does this leave the creators?

Seni Oremodu, a growth marketer who works with crypto startups, agrees that speculation in the NFT space in 2021 was problematic. “A lot of speculators in the space were there to push prices up for quick profits. It meant that it wasn’t always easy for projects with real value to stand out. Today, most of those speculative elements are gone and we’re seeing more honesty from creators. I think true artists will always make money.”

Bolarinwa Oladimeji, an artist from Nigeria who admits that the creators made money and became famous during the NFT boom. She told TechCabal that “the NFT space is not as vibrant as it used to be, and sales are harder to come by.” For her, the loss of interest in the space is due to people burning their fingers investing in “bad projects”. Those losses have led to more scrutiny and paranoia; nobody wants to lose money again.

According to Bolarinwa, “What you will get from a sale of 0.5 ETH in January 2022 is not what you will get now. It’s harder to make sales now. People are no longer FOMO driven, and you need to work hard or have influence in the space to sell your project these days.”

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