Nigerians have not been left out in the massive adoption of these digital currencies as it is ranked among the top 10 countries that trade Bitcoin most – according to Statista.
Making borderless or international payments can be expensive and slow depending on the means employed. It is even more difficult when you’re in Nigeria. This is what has contributed to the popularity of digital currencies among Nigerians. Over the years, Nigerians have enjoyed the ease and speed of making borderless payments using Bitcoin and other cryptocurrencies.
- A digital currency exists on a decentralized network known as a Blockchain used for peer-to-peer, borderless, and trustless payments. The first successful crypto and still the largest existing so far is Bitcoin which Satoshi Nakamoto introduced in 2009. Currently, there are about 13,000 digital currencies listed on CoinGecko and available for trading on several exchanges.
Government restrictions on cryptocurrencies in Nigeria
In February, 2021 the Federal Government of Nigeria issued a circular to all banks in Nigeria directing them to flag and close down all accounts suspected or confirmed to be transacting with cryptocurrencies or interacting with cryptocurrency exchanges.
One implication of the Blockchain being decentralized is that individuals can still carry out transactions on the Blockchain as much as they like so far they have access to the internet. The Nigerian government however succeeded in making things a little difficult for the crypto enthusiast in Nigeria because of the ban on trading NGN/USD directly from the banks.
P2P to the rescue
P2P is an acronym for peer-to-peer payment or transaction; it has been the savior of Nigerians trading crypto since the ban. Trading on P2P involves a buyer, a seller, and an escrow (which is usually a centralized exchange). The centralized exchange serves as an intermediary between the buyer and the seller to eliminate trust and ensure the smooth exchange of their individual currencies.
Using the P2P method of trading practically puts the banks “in the dark” in the sense that they have no idea what payment is for crypto as far as it isn’t labeled “crypto” or “bitcoin” or anything related. Nigerians got used to trading NGN/USD via P2P and the ban didn’t seem to affect much. Although some individuals fell victim to the blocking of accounts as the banks were able to spot them; the vast majority still get away with it.
Why Nigerians keep trading crypto
There are a number of reasons Nigerians have resulted in trading crypto assets. Interestingly, some even use it for local transactions as they don’t trust the banks. Some of these reasons include:
- Lack of confidence in the Naira: the Nigerian Naira has fallen to a record low of around #700 to $1 on the black market and currently averages around #660. Although the official rate currently is #415, the supply of the Central Bank of Nigeria (CBN) doesn’t meet the dollar demands of Nigerians. Nigerians would readily get dollars on the black market but have limits when they want to get officially.
- Money making: many youths in Nigeria have positively utilized the benefits of the Blockchain and the entire crypto space to earn a living for themselves. Thankfully, it is a leveled playing field for everyone as anybody, irrespective of age, class, race, or color can make as much money as they want in the crypto space provided they play their cards right.
- Apart from actively trading crypto, some have become NFT artists, ambassadors for exchanges, Blockchain developers, content writers, etcetera. The opportunities that lie in Blockchain technology would make anyone stay irrespective of any restrictions.
- Ease of international transactions: it is relatively easier and faster to send money via the Blockchain network internationally compared to most available payment platforms that even require registration and KYC verifications. With digital currencies, middlemen (banks) are eliminated and you can make borderless payments within minutes.
Crypto adoption in Nigeria will most likely continue to grow and their trading volumes on exchanges will continue to skyrocket. It doesn’t seem practically possible for the government of Nigeria yet or perhaps any government to effectively ban the trading of crypto in their country.
However, centralized exchanges can be banned in certain countries or their operations regulated. Decentralized exchanges would still exist and serve as an alternative to keep the crypto spirit alive.
