Crypto and blockchain in Nigeria: How has the budding industry fared in 2020?

Africa is said to be the perfect ground for blockchain and cryptocurrencies to thrive. This is largely due to the fact that the economic realities of the continent are alarming. Africa still struggles with economic instability. Several factors still mitigate against its quest of being a self sufficient economy. 

Blockchain is a transformative technology that could turn the continent around. The word “blockchain” itself, is getting a substantial amount of popularity on the continent. Its most popular application is in cryptocurrencies. Cryptocurrency is gradually transforming financial operations on the continent. Although no significant reduction has been seen in the use of traditional financial systems, crypto is no doubt gradually taking hold of finance in Africa. 

Other applications of this technology exist. Although not as popular as Cryptocurrency, they hold prospects that are just as promising. 

Education, healthcare and  governance, are just few of the African sectors which blockchain could be integrated into. These sectors are germane to Africa’s survival, yet, they remain one of the most poorly developed. 

The rave about blockchain being Africa’s Calvary has been going on for a few years. Just how well is the transformative technology positioning itself in Africa to heal the continent of the woes that plague it? 

A review of the blockchain and crypto related events in 2020 could give us an insight on how these technologies are taking shape in Nigeria. Nigeria is Africa’s most populous nation, and has the largest economy. The problems that rock Africa can be found in Nigeria in no small measure. 

2020, for obvious reasons, is a very peculiar year. Notwithstanding, in the midst of all the chaos, crypto and blockchain still made a mark on the year. 

Crypto-scam intro

Prior to 2020, crypto activity had gained significant ground in Nigeria, but it’s fair to say that a number of people were introduced to crypto through scams. 

Crypto-related scams threatened to undermine the potency of blockchain technology in improving Africa. Crypto criminals made blockchain and crypto innovators to equally seem like criminals. While crypto might seem like a way to avail Africa of its financial woes; it is a great way for scammers to scam. 

To reassure public confidence in the crypto and blockchain space, SIBAN (Stakeholders in Blockchain Technology Association of Nigeria) ensured to protect people against crypto scams. The scourge of crypto scams could kill the rise of crypto dead in its tracks, thereby, making Nigeria and even Africa lose out on the transformative tech. 

Whilst the triumphant entry of crypto might have been brought in through thievery, its dominance, however, is gradually bringing about the much needed development on the continent. 

Bitcoin facilitating international trade.

The ability of cryptocurrencies to easily jump across borders was something businessmen began to take advantage of in 2020. There was no limit, no exorbitant charge and no need for foreign currencies, just good old bitcoin.

 Nigeria is a largely import-dependent country. The trade hurdles encountered by importers due to exchange rates could be quite discouraging. Settling payments especially with their Chinese counterparts can be very cumbersome. Finding foreign currencies is quite hard in Nigeria; a problem that has caused the constant devaluation of the country’s fiat. 

The turn to bitcoin is simply logical. It is a phenomenon that has caught the eye of international media houses such as Bloomberg

While bitcoin might be an easy way of conducting international trade, there are still limits to it. The legality of bitcoin is still hazy, however. Most business people would not openly reveal that they use bitcoin for international trade. Whilst the network itself cannot facilitate too many transactions at once, (a problem that can be solved with the lightning network), but this problem could be solved before mainstream adoption. 

The rise of African blockchain startups.

2020 saw funding, expansion and establishment of crypto and blockchain startups.  In the first quarter of the year, tech startups raised about $350 million in funding. Fintech makes up 82% of the funding. 

Blueloop, a crypto payment platform secured its own funding in late 2020. The company founded by Ben Eluan, Osezele Orukupe and Israel Akintunde, helped its users get payment from anywhere in the world and convert it into fiat that is ready to be spent directly from the platform. The company created the Flux. It operates like a regular banking app but supports cryptocurrencies. 

With a $77,000 funding, the young company is facilitating crypto usage in Africa’s most populous country. 

YellowCard is another startup that secured funding in 2020. The $1.5 million raised in a seed round was geared towards expansion to other African countries. YellowCard is waxing strong and gradually becoming a preferred crypto exchange for Nigerians and Africans. 

Binance-backed Xend Finance also caused a stir in the DeFi space in 2020. Decentralized Finance, which is a relatively new phenomenon in the Cryptocurrency ecosystem, now has a possible frontier in Nigeria. The Nigerian startup announced a public launch in November. With a strategic funding round of $1.5 million dollars, the company hopes to help credit unions with DeFi. The constant devaluation of the currency is a problem for credit unions. Xend Finance will help these credit unions turn their funds into crypto and multiply it with yield farming. 

#EndSars protest featuring Bitcoin

Another highlight of 2020 in Nigeria is the #EndSars movement that rocked major cities of the country for days. The civil unrest will come to feature bitcoin in a way no one imagined. 

Bitcoin is known for making international trade easier and aiding cross border funds transfer, but assisting protests is not something anyone saw coming. When Nigerian youths came together in October to decry the reprehensible actions of the defunct police unit known as SARS, they didn’t think bitcoin would be of help at some point. 

The government of Nigeria, in a bid to stop the organized uprising by youths, allegedly shut down the bank accounts that were sponsoring the protests. Bitcoin however came to the rescue. 

The importance of a currency that cannot not be controlled by the government came to play. A perfect example of how cryptocurrency can liberate Africa was seen firsthand by many Africans. 

Blockage of Naira remittance

Surprisingly, the Nigerian government also has a hand in the promotion of crypto this year. In a communique issued by the Central Bank, it directed international money transfer operators to cease processing diaspora remittance payments in Naira. 

This new directive allows Nigerians to receive international payments into their domiciliary accounts. 

Blockchain and crypto is no doubt taking shape in Nigeria. The year 2020 has created scenarios that have facilitated the popularity and usage of the technology in Nigeria. 

From dominating p2p bitcoin transactions to growing crypto startups, it is safe to say the blockchain and crypto future of Nigeria looks promising. 

It is a trend that is bound to grow in popularity and in adoption. More people will save as crypto, rather than fiat in banks. More international transactions will make use of bitcoin and more crypto startups will spring up to cater for the increasing number of crypto users. 

To envision this kind of growth trajectory for this technology automatically translates to envisioning economic development for Nigeria and Africa at large. 

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