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1.1 Background of the study

The exchanging of goods and services has taken place using a variety of methods and mediums in human history. Many of these methods and mediums are often tangible, such as metal coins or paper money.

Without a doubt, the global financial community is embracing the latest technological transformation from real currency to almost abstract currencies. Cryptocurrencies were born as a result of this surge. Cryptocurrency is described as a digital record-keeping system that uses balances to keep track of trading commitments and is accessible to all traders. Bitcoin (BTC), Litecoin (LTC), Ethereum (ETH), Ripple (XRP), Bitcoin Cash, Neo, Iota, Dash, Qtum, Monero, and Ethereum Classic are examples of cryptocurrencies. A cryptocurrency system is defined by two parameters: money growth rate µ ≥ 0 and transaction fee charge at a rate τ ≥ 0. Since the creation of Bitcoin in 2009, numerous private cryptocurrencies have been introduced. Since the advent of cryptocurrency, it has been getting a lot of media attention, and its total market value has reached 128.78 billion USD in 2019. It operates based on a technology called ‘’Blockchain’’.

Cryptocurrency, according to Nakamoto (2008), is a peer-to-peer Electronic Cash System. Cryptocurrency’s peer-to-peer framework is based on blockchain, allowing transactions to take place directly between users without the need for an intermediary (Hameed & Farooq 2016; Grech, & Camilleri, 2017). It makes secret transactions between parties, and as a result, parties are unaware of each other’s true identities (Dierksmeier & Seele, 2016). Since the entire specifics of a participant’s transaction on the cryptocurrency blockchain are publicly revealed to other people, this might be essential (Bech & Garratt, 2017). Unlike the traditional currency which is issued at intervals determinable by the Central Bank of each country, cryptocurrencies like bitcoins is mined at a fixed issuance algorithm such that the number of Bitcoins to be mined is halved every year.

The majority of financial institutions and governments have encouraged online payment as a secure and fast way to exchange physical currency. This method of currency use is an attempt to digitalize physical currency. Total and real digital currencies (i.e., no physical form) have been launched from time to time in recent years.

While the origin of money is unknown, coin and paper currency can be traced back to the seventh century B.C. (Dumas, 2015). While money hasn’t changed much since then, its purpose remains the same: to promote transactions. Credit cards, online banking, and bitcoin are now accessible.

Polillo (2011) introduced a fascinating theory regarding the production of currencies, the theory suggests that there are general social processes that allow for various kinds of networks and organizations to be able to create currencies. He also presented the principle of money as “multiple currencies” and argues that through social practices, societies constantly transform money in creative ways to better suit their needs.

Berentsen and Schär (2018) affirmed that Bitcoin (the first recognized cryptocurrency) originated with the white paper that was published in 2008 under the pseudonym “Satoshi Nakamoto,” as it was published via a mailing list for cryptography and has a similar appearance to an academic paper. It was made known that the creators’ original motivation behind Bitcoin was to develop a cash-like payment system that permitted electronic transactions but that also included many of the advantageous characteristics of physical cash.

According to Silva (2016), cryptocurrency is a system characterized by a computer program of three main axes: first, a public system of transaction registration called block-chain, which serves as an accounting book of its entries and exits; second, an encryption algorithm called asymmetric encryption-associated with a proof-of-work, which is used to validate operations of the currency; and third, a public system of transaction registration called block-chain, which serves as an accounting book of its entries and exits.

Cryptocurrency is a virtual currency that uses a web-based communication protocol to aid in the transfer of wealth from one person to another, but when the qualities of money are put in perspective, Bitcoin appears defective. According (Gulled & Hossain, 2018). Some of those currencies which have emerged in the recent time are Litecoin (LTC), Ethereum (ETH), EOS (EOS), Cardano (ADA), NEO (NEO), Bitcoin (BTC), Monero (XMR), Ripple (XRP), Dash (DASH).

 1.2 Statement of the problem

A cryptocurrency is a form of digital currency that is built on a cutting-edge technology called the blockchain. Small companies are among its customers. A cryptocurrency is a form of digital currency that is built on a cutting-edge technology called a blockchain. Small companies, financial tech startups, and retail customers are among its users, who use it to transfer money across borders and as an investment asset. Because crypto-assets such as Bitcoin and its predecessors, also known as altcoins, have gained widespread acceptance and usage for purchases, trading, and banking, they have become increasingly popular. Bitcoin, the most common cryptocurrency, has a gross daily exchange volume of about $38.68 billion and a market capitalization of $123.12 billion as of April 2021. (

Many Africans use cryptocurrencies such as Ethereum, Ripple, Bitcoin, and Litecoin for banking and money transfer purposes. There are a variety of reasons for the rise in cryptocurrency use on the continent, but among them is the unreliability of local currencies. In most situations, the high level of economic volatility in most parts of Africa renders cryptocurrencies a viable medium for wealth storage rather than storing their worth. (Source:

It is a cheaper way for individuals and entrepreneurs to send funds to everyone around the world for remittance, vendors, e-commerce shopping, and to and from friends and family members located abroad, since it costs far less than many commercial banks in Africa, which charge exorbitant fees in an unpredictable currency market and unreliable economic ecosystem.

As a result, many Africans in urban areas have limited Internet coverage due to smartphone saturation, and such platforms have made cryptocurrency adoption available to all via mobile.

Crypto-assets are being used by financial tech startups in Africa who are disrupting the market with emerging technology like mobile currency. They’re still using Blockchain and cryptocurrency to streamline their operations both within Africa and internationally. For the needs of the ordinary African, many of these startups have developed blockchain tools, token exchanges, and money transfer services.

In addition, many African companies and startups are also embracing and paying in cryptocurrencies, XRP, bitcoin, and bitcoin cash in order to meet multinational vendors and customers. An increasing number of innovative payment gateways and exchanges based in Africa and around the world, such as Payfast, Gemini, Coinbase, Luno, Bitpay, Bitstamp, Bithumb, Binance, and others, have made this possible for many Africans.

Luno Exchange, headquartered in South Africa, is Africa’s leading cryptocurrency exchange. It was established in 2013. It has over a million users in over 40 countries and is the first crypto exchange to be located in Africa, with offices in Nigeria and South Africa. It offers the crypto trading pairs ZAR/BTC and NGN/BTC.

Since the global recession of 2008, crypto-assets such as Bitcoin were developed with the aim of creating a digital currency that was open and controlled by customers, pushing for low transaction costs, improved protection, and easy access to its medium of choice.

Nigeria has Africa’s biggest biodiversity, but the government has yet to control its use and trade. Cryptocurrencies have been declared non-legal tender by Nigeria’s central bank which has prompted much agitation by Nigerians calling for the review of the ban placed of the trade of crypto in the country.

1.3 Objective of the study

The primary objective of this study is to critically assess the surge of cryptocurrencies and their usage in Africa. This study tends to find out if the unreliable local currencies of countries of Africa contributed to the surge of cryptocurrencies usage in the continent. This study also investigates if the high uncertainty of economies in most part of Africa makes cryptocurrencies a viable medium for asset management in lieu of storing its value.

1.4 Research hypotheses

The following null hypotheses are formulated and tested in this study:

H01: The unreliable local currencies of countries of Africa did not contribute to the surge of cryptocurrencies usage in the continent.

H02: The high uncertainty of economies in most parts of Africa did not make cryptocurrencies a viable medium for asset management.

1.5 Significance of the study

This study will be of significant benefit to all countries of Africa and the world at large because it will bring to their notice the benefit of cryptocurrencies and how it contributes to viable mediums for asset management. This study will also help the government of African countries and the world at large to see the need to stabilize their economies and improve their local currencies value. This study will also serve as a benchmark for students, scholars, and researchers who may want to carry out further research on this topic or a similar area in the future.

1.6 Scope of the study

This study shall enroll staff of Paystack, Flutterwave, Remita and Interswitch in Lagos State as participants for this study.

1.7 Limitation of the study

The major factors amongst others that posed a challenge to the researcher while carrying out this study were insufficient time given for the study, inadequate literature on this topic, and insufficient funds.

1.8 Definition of terms

ASSESSMENT: the action or an instance of making a judgment about something

SURGE: a sudden powerful forward or upward movement, especially by a crowd or by a natural force such as the tide.

CRYPTOCURRENCY: This is a digital currency that can be used to buy goods and services, but uses an online ledger with strong cryptography to secure online transactions. Much of the interest in these unregulated currencies is to trade for profit, with speculators at times driving prices skyward.

USAGE: the action of using something or the fact of being used.

AFRICA: Africa one of the 7 continents of the world. Africa is the world’s second-largest and second-most-populous continent, after Asia in both cases. At about 30.3 million km² including adjacent islands, it covers 6% of Earth’s total surface area and 20% of its land area. With 1.3 billion people as of 2018, it accounts for about 16% of the world’s human population.


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