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Crypto remittances are growing in Nigeria, due to CBN’s strict Naira defense policies

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Nigerian flag

During the October 2020 #EndSars protests in Nigeria, the Federal Government of Nigeria prevented peaceful protesters from using local payment platforms to contribute funds to promote the movement. However, bitcoin saved the day due to its freedom from government control. This opened the eyes of many young Nigerians to the advantages of bitcoin and cryptocurrency.

The young Nigerians instantly switched to cryptocurrencies as a means of raising funds. In a week, bitcoin accounted for 40% of the nearly $400,000 raised. This is one of the proofs on how young Nigerians continuously use bitcoin to navigate a non-supportive and restrictive monetary and banking system.

Since 2015, Nigerians have traded 60,215 bitcoins valued at more than $566 million, on Paxful, the leading peer to peer (P2P) bitcoin market. Real time data from Coin, from the beginning of May 2015 to the Middle of November 2020, shows that the volume of bitcoin transactions in Nigeria increased by at least 19% since 2017, and the highest transaction volume (20,504.50) was traded in 2020.

Nigeria was ranked second only to the United States in trading volume, in the Bitcoin peer to peer (P2P) marketplace of Paxful, according to Quartz Africa. Nigeria takes the lead as Africa’s largest economy, while its counterparts like Kenya and South Africa follow. This shows increased growth in the adoption of Bitcoin and other cryptocurrencies among young Nigerians.

Bitcoin trade reached 30% as the highest peak this year, during the country’s national lockdown. Paxful reported a 137% increase in the registration of new users from January to September. Paxful also stated that Nigeria has 1.3 million registered users, which makes up a quarter of their customer base. 

The rapid growth of bitcoin and crypto adoption among Nigerians youths is likely due to a number of factors, chief of which are the strict exchange rate policies by the Central Bank of Nigeria (CBN) and the continuous devaluation of naira towards dollar. In an official report issued by the CBN on December 16, it directed all international money transfer operators (IMTOs) to stop processing diaspora remittance payments in naira, with immediate effect.

The Central Bank of Nigeria (CBN) said this new policy, which enables Nigerians to receive international payments in their domiciliary account, is in line with the prior official report. The CBN also issued a notice via its official Twitter account, stating that two IMTOs, Azimo and TransferWise, were not licensed to operate as IMTOs in the country. They further said that the masses should desist from patronising them.

In the last couple of years, the CBN’s “Naira Defense Policy” has worsened the standard of living of Nigerians by hardship for ordinary citizens and small scale businesses alike. However, the CBN is trying to reverse some of its strict exchange rate policies, but this has pushed many young Nigerians into bitcoin. These restrictive policies have led to the mainstream adoption of bitcoin and other cryptocurrencies across Nigeria, as bitcoin acts as a lifeline for many Nigerians as the value of the Naira continues to sink. With Bitcoin being a cryptocurrency, its value is defined by the market forces, and not by the government.

The increased awareness and availability of easy-to-use bitcoin platforms has boosted Nigeria’s Bitcoin Liquidity, thereby, putting an end to the major challenge that has hindered bitcoin adoption. Nigerians now have local and international platforms such as Roqqu, Luno and Binance to trade bitcoin and other cryptocurrencies on, but a lot of trading is still being done on informal channels via escrow services on WhatsApp and Telegram.

The data from Google Trends shows that Nigeria is at the leading position in terms of the global Google searches on Bitcoin. Due to the absence of government influence and the provision of considerable financial stability, cryptocurrencies will undoubtedly continue to garner widespread adoption across the country. 

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From Libra to Diem: What happened to Facebook’s Digital Currency plans

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Facebook digital currency
Source: Getty Images (modified)

In 2019, Facebook Inc. announced the Libra, a digital currency project being developed by the company. Libra was unveiled to be a blockchain based stablecoin backed by bank deposits and short-term government securities and was to be integrated into Facebook’s services like Messenger and WhatsApp. The Libra blockchain was said to be able to handle 1000 transactions per second, in stark contrast to Bitcoin’s 7 transactions per second. Needless to say, the news that the largest social media company was working on a cryptocurrency rocked the market for a while. But for some reason, we haven’t seen anything really significant happen since then. Why?

First off was the regulatory hurdle. It would appear that Facebook realized that it didn’t have top marks in the trust department, especially in public opinion. To this end, the Libra project was grilled by U.S lawmakers in July 2019 and the central theme was the issue of trust and data privacy. Other regulators also commented on the issue, with European Central Bank board member Benoit Coeure reportedly saying that digital currencies such as the Libra could challenge the supremacy of the U.S. dollar. Similarly, France’s and Germany’s finance ministers at the time had expressed concerns over the Libra, citing risks around financial security, investor protection and anti-money laundering laws.

Libra also faced the hurdle of its project partners dropping out of the initiative. Founding members eBay, Visa, Mastercard as well as PayPal withdrew from the project which may have had a hand in stalling it. The regulatory scrutiny surrounding the project and Facebook’s own unpalatable reputation might have influenced the decisions of the partners who left the project.

This story would be incomplete without mentioning the efforts at rebranding which morphed the project from Libra to Diem in late 2020. These efforts may have been subtly aimed at distancing the digital currency from the scandals and scrutiny that plagued Libra as a result of its association to Facebook. However, those efforts haven’t been particularly successful. As a result of these factors and more, the Diem association scaled back its earlier hoped for global launch and instead settled for a U.S. stablecoin. That doesn’t seem to have happened.

All in all, it would appear that Facebook is adamant in the pursuit of this blockchain system. However, regulators aren’t completely convinced. The headache seems to be about the issues around it’s possible widespread use, considering the amount of Facebook users. The apprehension is about such a currency’s competitive power with other fiat currencies as well as privacy concerns.

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Africa Blockchain Institute

Africa Blockchain Institute Organized The First African Blockchain Summer Bootcamp For Teenagers In Ghana

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In the spirit of catching them young, the Africa Blockchain Institute organized the first-ever Blockchain Summer Bootcamp for teenagers (age range 13 to 19 years old). A successful Bootcamp, according to the participants’ testimonials and stakeholders, held at the OpenLabs, Ring Road, Accra Ghana, between Monday 2nd August, and Friday 6th August 2021. 

The teenagers applied from across Africa, and selected participants all converged at the OpenLabs, Ghana, for an intensive five days of learning, interacting, and implementing personal  Blockchain projects. The participants were divided into three significant tracks, thus; Blockchain Development, Blockchain for Creatives and Blockchain Entrepreneurship. 

Blockchain Summer Bootcamp for Teens by ABI
Blockchain Summer Bootcamp for Teens by Africa Blockchain Institute

Across these three tracks, the teenagers learnt introductory units to Blockchain Development for societal challenges, Blockchain evangelism, Non-Fungible Tokens, and how Cryptocurrency works. Another highlight of the program was the excursion to the Accra Digital Centre, where the Boot Campers were introduced to the tech ecosystem and feel of the Ghana Tech Lab and Accra Innovation Hub spaces. A visit was also made to the Museum of Science and Technology, and the teenagers got to understand the history of technology in Ghana. 

Worthy of mention was the panel session aimed at motivating the students to pursue a career in technology. While making his comments during the panel session, the founder of BankLess Africa, Mr. Muntala Mohammed Shaibu, urged the teenagers to stop seeing themselves as too young to experiment with new technologies. In her remarks, Ms. Elohor Thomas, CEO & Co-Founder of CodeLn, urged the teenagers to continue to explore their interest in technology and blockchain early.

Blockchain Summer Bootcamp for Teens by ABI
Panel Session, Blockchain Summer Bootcamp for Teens by ABI

The Bootcamp ended with personal project presentations from the Blockchain Development and the Blockchain for Creatives & Entrepreneurship tracks. Projects such as NFT blogposts, Blockchain product reviews and Blockchain for transport and logistics were presented. The best presentation won the OpenLabs scholarship for Robotics Course. Thanks to Dr Sujith Jayaprakash, the Director of OpenLabs, Ghana, for the offer of scholarship. In his closing remark, the Executive Director of the Africa Blockchain Institute, Mr. Kayode Babarinde, urged the teenagers to continue using the  skills and knowledge gained during Bootcamp to explore Blockchain-related solutions further. We also appreciate Mr. Ganzaro Omar, Chairman, AfroBlocks, for his supports, and fostering collaborations with the Ghanian Blockchain community.

The Africa Blockchain Institute will continue to hold future Blockchain Summer Bootcamp series in various African cities to drive Blockchain knowledge into innovators early enough. 

Oluwaseun David ADEPOJU

Head of Research,

Africa Blockchain Institute. 

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CBN Crypto Ban Increases P2P But Is It Also Increasing Crypto Scams?

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Crypto ban

The Central Bank of Nigeria CBN on the 5th of February 2021 caused an uproar within the crypto community in Nigeria and globally. The Apex bank released a circular that prohibits financial institutions from processing crypto-related transactions. Banks and other financial institutions were also directed to close accounts that made crypto-related transactions.

As expected the directive did not sit well with crypto enthusiasts, traders and most Nigerians alike. In the CBN’s defence, they were protecting Nigerians from crypto-related scams, volatility of the crypto market and several evils perpetrated with cryptocurrencies. Though valid reasons, many Nigerians still express their resentment of the directive. Cryptocurrencies which serve as an alternative to the weakening Naira are faster and easier at facilitating cross border transactions. 

However, the ban has not hindered crypto transactions in the country. The country still ranks high when it comes to crypto transactions globally. Business Insider reports that between January and March 2021,  p2p trading value of bitcoin in Nigeria was worth $99.1 million. This is $9 million more than the value of bitcoin p2p transaction in Kenya for the whole of 2020. Cleary p2p has increased significantly since the ban. It is therefore safe to say that the ban has increased crypto activity in Nigeria. But has it increased crypto scams too?

The dark side of p2p

While volatile nature cryptocurrencies might in truth lead to loss of funds, the ban by the Central Bank of Nigeria could make Nigerians more vulnerable to crypto scams as they now purchase these digital currencies from unregulated sources hence, p2p.

“It was very easy just buying bitcoin straight from the Luno app but now I need to find someone who is willing to sell me bitcoin and there is really no way to ascertain the person’s trustworthiness.” This statement by crypto newbie, Adekunle Agbetiloye sums up the troubles and vulnerabilities crypto newbies go through to buy and sell crypto assets.

Kunle has been fortunate to have friends that are more grounded in trading cryptocurrencies. This has prevented him from falling into the hands of scammers that find newbies like him, easy picking. In his words “I know people that have fallen victim to crypto scammers that is why I only transact with people that I know personally”.

Ezekiel Juwon wasn’t lucky enough to buy from someone he knew personally. He recounts how he unsuspectingly sent money to a crypto scammer. In his words, “as a beginner I think it is more convenient to buy directly from crypto apps than dealing peer-to-peer. As someone who has experienced crypto scams first hand, I know this for a fact”. Juwon also adds that regulated p2p platforms created as an alternative to trading crypto can also be dangerous. He is convinced that more people will suffer his fate if the ban isn’t lifted. “Everyone wants to get in on crypto, it saves you from poverty so the ban just makes newbies vulnerable”. 

Just like Adekunle, Oyin Komolafe is fortunate to be surrounded by crypto veterans. She says “aside from the grace of God, what is helping me is that I am surrounded by people who know their way around crypto. However, I am sure that newbies will be susceptible to crypto scams because of the CBN ban”

What experts have to say   

However, Crypto expert and blockchain stakeholder, Samuel Attah feels crypto platforms have created alternatives that should keep crypto newbies safe. He sights Bundle as an example of these platforms. In contrast, some of these new users have said they do not find these platforms easy to use. 

Another crypto trader who identifies himself simply as Smogz, says these alternatives by crypto exchanges and crypto platforms require a lot of expertise. Smogz believes that the ban will increase crypto scams. “Crypto platforms serve as a shield to protect crypto beginners from scams. Now that these beginners have to look outside of the confines of these platforms they are open to being ripped off”

It is clear the crypto ban cannot stop Nigerians from using cryptocurrencies. Although a risky investment venture, crypto assets are known to be a source of wealth. Ensuring the safety of Nigerians while they use these crypto assets should be a priority.

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