African Crypto Adoption Drives Luno to 7 Million Customers

The Expanding Cryptocurrency Landscape and Luno's Growth

The cryptocurrency market has experienced substantial expansion throughout the past year, largely fueled by the increasing involvement of institutional investors recognizing bitcoin’s value as a store of wealth. The surge in bitcoin’s price during 2020 was also accelerated by its growing global acceptance, with the total number of cryptocurrency users worldwide exceeding 100 million by the third quarter of that year.

Luno's Customer Base Expansion

Founded in 2013 by Marcus Swanepoel and Timothy Stranex, Luno, a crypto company based in the U.K., witnessed its customer base grow from 6 million between January 2020 and January 2021. This figure has subsequently increased to 7 million.

Currently, the company employs close to 400 individuals across locations including London, South Africa, Malaysia, Indonesia, Nigeria, and Singapore. Luno serves customers in 40 countries globally.

Consistent Growth and Recent Acceleration

CEO Marcus Swanepoel notes that Luno has observed month-on-month increases in its user numbers for the last seven years. However, the recent period marks the first instance of such a significant acceleration in growth.

Factors Driving Luno’s Success

Like many other cryptocurrency exchange startups, Luno’s growth is attributable to several factors. While discussions exist regarding the potential for bitcoin to be utilized in everyday transactions by enthusiasts and attracting interest from institutions like BNY Mellon, Mastercard, and Tesla, widespread mainstream adoption remains a distant prospect.

Currently, cryptocurrency primarily functions as an investment vehicle. This characteristic has proven particularly appealing to individuals in Africa, a key demographic contributing to Luno’s expansion and the substantial traction it is gaining.

Market Survey Insights

Last year, Luno conducted a survey across its operating markets, gathering responses from 15,000 individuals in South Africa, the U.K., France, Italy, Indonesia, Malaysia, and Nigeria. The survey aimed to understand how the pandemic had influenced perceptions of the existing financial system.

The results indicated that 54% of African respondents were open to adopting a single, global digital currency, compared to 41% in Asia and 35% in Europe.

Africa's Prominent Role

Africa’s significance is further demonstrated by its customer numbers. Of Luno’s 7 million global customers, 4.7 million reside in Africa. This represents an increase from 2.3 million in January 2020.

App installations across the continent have risen by 271% during this period, and trading volumes have experienced a tenfold increase, surging from $555 million to $7 billion. Luno’s total trading volume reached $8.3 billion.

Early Market Entry and Infrastructure Development

A significant portion of this growth can be attributed to Luno’s early presence in the market. Over recent years, infrastructure in regions that previously lacked the capacity to support the crypto market has improved considerably.

Luno has been instrumental in enhancing the cryptocurrency marketplace experience by incorporating local currencies and providing foundational education on digital currencies.

Improved Accessibility and User Experience

“During the previous bitcoin surge in 2017 and 2018, purchasing crypto was considerably more challenging,” Swanepoel explained to TechCrunch. “Trust issues were prevalent, account verification and wallet setup often took days.”

“However, over the past three years, companies like ours, particularly in Africa, have developed this infrastructure, including KYC processes, new payment methods, and enhanced customer experience and support. The overall experience is now much smoother, and education levels are significantly higher. I believe this has played a crucial role in crypto adoption on the continent.”

Acquisition by Digital Currency Group

In September of last year, Luno was acquired by Digital Currency Group (DCG), an investment firm focused on building, acquiring, and investing in blockchain companies. DCG’s portfolio includes companies such as Coindesk, Genesis, and Grayscale Investments.

Prior to the acquisition, DCG had already invested in Luno’s seed round in 2014. Swanepoel stated that he recognized an opportunity to scale Luno to a larger extent following the substantial growth and adoption observed on its platform.

Scaling with DCG’s Support

“For the first five to six years, our operations were on a smaller scale. Now, we aim to expand significantly, and partnering with a global platform like DCG facilitates this, as they possess substantial capital and a commitment to investing in both Africa and beyond,” he noted.

Leveraging DCG’s Industry Insights

The CEO added that DCG possesses greater visibility into the cryptocurrency industry and emerging trends. The acquisition was intended to enable Luno to leverage DCG’s insights and maintain a competitive edge, a strategy that appears to be yielding positive results.

Since the acquisition, Luno has experienced a 167% increase in active users. As of January, the average user held over $7,000 in their wallet, a 56% increase from December 2020.

Future Outlook and Growth Projections

While nothing is permanent, the current cryptocurrency market bull run suggests that crypto is more than just a fleeting trend. In the first quarter of 2021, companies like Coinbase and Robinhood demonstrated strong growth projections with impressive performance.

Luno anticipates continued exponential growth, positioning the company to potentially reach 1 billion customers by 2030.