financial inclusion

Top 3 Cryptocurrency Startups in Africa to Keep an Eye On

the crypto startups from africa

Africa is booming in terms of cryptocurrency adoption. The adoption of cryptocurrencies has grown by 1,200% in Africa to $105 billion in market value in the last year alone, making Africa the third-fastest growing cryptocurrency economy in the world, as users seek out cheaper and faster ways to transfer money at home and abroad, as reported by Chainalysis, a New York-based research firm.

This is no surprise that countries such as Kenya, Nigeria, South Africa, and Tanzania all ranked in the top 20 of the 2021 Global Crypto Adoption Index. Nigeria, for example, is a forerunner in terms of e-money and now the country is ready to launch its national digital currency. Chainalysis also reported how Africa has a bigger share of its overall transaction volume made up of retail-sized transfers than any other region at just over 7%, versus the global average of 5.5%. Such incredible growth is easy to explain. 

Africa is the second-most-populous continent in the world, with around 1.3 billion people. Due to historic issues, African countries have suffered from banking infrastructure problems for a long time. This has made financial services less accessible, leading to around 57% of the population remaining unbanked. As Tim Fries said, Cryptocurrency could therefore be a good alternative to traditional banking in Africa, because this only requires a smartphone. And it’s true. Despite local regulators trying to settle down norms for cryptocurrency, that hasn’t stopped audacious attempts in emerging economies in Africa to make crypto and blockchain the norm for regular consumers. Let’s see these three vanguard companies.

Luno: When Africa is Your Core Business

The crypto industry as a whole is rocketing, and Luno is one of the early industry pioneers. The startup, a UK-based crypto company founded by Marcus Swanepoel and Timothy Stranex in 2013 with a focus on providing a simple, safe and easy tool for buying cryptocurrency online and on mobile, has today over 9 million customers globally and processed over US$21 billion on its exchange. What’s really interesting is that almost 7 million of Luno’s customers are Africans. Not such a big surprise. Today the company has nearly 400 employees across London, South Africa, Malaysia, Indonesia, Nigeria and Singapore, with customers in 40 countries globally, but Africa is still one of Luno’s strongest markets. 

Easy to use, Luno offers its clients a simple and secure way to buy and sell Bitcoin and Ethereum using a built-in cryptocurrency wallet. It supports several global fiat currencies such as the US Dollar, Euro, Pound Sterling and the South African Rand. Luno offers a brokerage service as well as offers training and consultancy services to help the general public understand the complexities of cryptocurrencies. “The average value of first deposits made by our million new customers is around US$32. Most new customers (83%) bought Bitcoin, while 27% bought Ethereum and 23% bought Ripple. Of the new customers, 35% are aged between 18 and 24, and gender splits align with trends in financial services – almost three quarters (65%) are male”, underlined to media Marius Reitz, GM for Africa at Luno. 

Ovex, Nearly R2bn a Month in Crypto Transactions

Launched in 2017 and based in Cape Town, Ovex is a mission-driven cryptocurrency exchange with the goal of accelerating the advent of an inclusive digital economy. The startup offers a fiat onramps allowing South Africans to buy and sell cryptocurrencies with South African Rands. As stated by the company, it offers over 20 coins and many unique features such as a crypto interest account and token faucet allowing users to buy cryptocurrencies at international rates leapfrogging the price disparity experienced in the South African Market.

The company was launched to simplify the arbitrage process. Arbitrage is the exploitation of price differences in the same asset on different markets: for example, buying bitcoin (or any other asset) cheap overseas and selling for a higher price locally. By the way, rather than exploit the arbitrage price gap in bitcoin, Ovex partnered with Trust Token, a San Francisco-based ‘stable coin’ platform with a market cap of nearly $500 million that allows users to buy cryptocurrency offshore at the international price, without ever having to leave Ovex. All the logistics of shipping foreign currency abroad is handled by Ovex.

And business is growing. Arbitrage is Ovex’s bread and butter. Volumes shot up during the Covid crisis, and now exceed R2 billion a month, reaching as high as R120 million a day. The larger part of Ovex’s business is its over-the-counter (OTC) desk, which offers institutions and high-net-worth individuals a secure and private channel for arbitrage or purchasing cryptos. Last August, the company signed a partnership with P2P Fintech Paxful. As part of the agreement, Paxful’s customers will be able to utilize Ovex’s Direct Transfer to Bank mechanism, which allows them to instantly convert their Bitcoin into fiat at the spot market price.

Nescoin: Crypto, Stop Being Confusing and Be More Transparent

The latest example of Africa-based cryptocurrency startup is Nestcoin. Launched at the beginning of November, rather than be another marketplace for people to trade crypto, Nestcoin is setting up as a parent company that builds and invests in products that will introduce crypto’s evolving uses to novices. As reported by the media, part of Nestcoin's effort is engaging writers to explain complex crypto subjects such as DeFi, NFTs, DAOs, and more to consumers. It means Nestcoin is trying to educate its users, hoping that doing so will further encourage clients to use its platform to make money, by playing games on a blockchain, and investing in digital art.

Users will be able to trade high-value coins like bitcoin and ether within this one-stop shop. Yele Bademosi, Nestcoin’s CEO and co-founder, says the work of its media division is key to the company’s broader goal of increasing crypto adoption: the main goal is making cryptocurrency easy to understand. 

Building crypto platforms is one side of Nestcoin, but the company is looking to two successful businesses to inspire Nestcoin’s growth: Digital Currency Group (DCG) and Bytedance, the Chinese owners of TikTok and other consumer internet companies. By creating products and investing in others, Bademosi says, DCG and Bytedance have deep expertise in their separate industries, in ways that would not be possible if they chose to build or invest but not do both.

Bademosi’s ambition for the company is grounded in his experience as a African tech entrepreneur. One of Bademosi’s first investments was in Buycoins, a Nigerian startup that used to be just a crypto exchange platform, but has slowly evolved into a holding company for other crypto products called Helicarrier, while recently the company just made an investment in LazerPay, a cryptocurrency payment platform that touts to be the ‘Stripe for cryptocurrency’.