Africa's digital-asset market has grown over 1,200% by value over the last year, making it the third-fastest growing cryptocurrency economy in the world, as users seek out cheaper and faster ways to transfer money at home and abroad, Chainalysis said in a report on Tuesday.

This is no surprise as Kenya, Nigeria, South Africa, and Tanzania all ranked in the top 20 of the 2021 Global Crypto Adoption Index. Chainalysis also said Africa also 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%.

Peer to peer platforms (P2P) like Paxful and Remitano that do not have a central player like a bank or exchange, have become more popular than ever across Africa as a way of sending crypto.

Users have moved away from exchanges like Binance in favor of this alternative way of moving funds, Adedeji Owonibi, CEO and founder of a Nigerian blockchain consultancy company Convexity, told Chainalysis.

Binance has been banned and blocked in several countries around the world and South Africa issued a warning to the exchange in September and said it was not authorised to operate in the country.

"P2P platforms are especially popular in Africa compared to other regions, and many African cryptocurrency users rely on P2P platforms not just as an on-ramp into cryptocurrency, but also for remittances and even commercial transactions," Chainalysis said in their blog

Cross-region transfers make up 96% of Africa's cryptocurrency market, but they only account for 78% of all other regions combined. People in Africa have been opting to send remittances using crypto because of the high cost of sending money abroad.

Chainalysis's research also showed crypto adoption is also correlated with instability in local currencies, such as the Nigerian naira. It said its data showed crypto trading volumes tend to increase when the naira falls in value, which can fire up inflation.

On top of that, Nigerian banks don't allow customers to send more than $500 out of the country at a time.

"If the government is strictly limiting the amount of money people can send abroad, they'll get creative and turn to cryptocurrency," Artur Schaback, COO and cofounder of popular P2P exchange Paxful said.

He said his company's platform saw 57% growth in Nigeria over the last year and 300% growth in Kenya.

"In many of these frontier markets, people can't send money from their bank accounts to a centralized exchange, so they rely on P2P, " Schaback continued.