The looming financial crisis slamming the Nigerian economy appears to worsen as time passes. The Nigerian naira continues to depreciate significantly. A financial projection by Goldman Sachs predicts the devaluation of the naira to about ₦550 per dollar within the next 12 to 18 months. Disturbing financial projections like this, and other unfavorable financial conditions that toll Nigeria’s economy, leave Nigerians with the burden of finding a better alternative currency to store their wealth.
The rise of digital currencies, particularly Bitcoin, has presented Nigerians with an alternative to the depreciating naira. Digital currencies, like the bitcoin and BUS, the digital dollar backed by Binance, protect the wealth of Nigerians from the financial storms that hit the nation. While others who store their value in naira inevitably experience great loss, those who trade the naira for Bitcoin and the stablecoin BUSD currently offered on Bundle Africa, see a significant push in their wealth. Bitcoin is a digital currency which is built with blockchain technology and allows users to exchange funds and transact directly via peer-to-peer networks which do not require middlemen.
Although the introduction of digital currencies in Nigeria was received with mixed sentiments due to its perception as a Ponzi scheme, quite a lot have changed since then. The use of Bitcoin has gained a significant surge over the years. In terms of global search volumes for bitcoin over the past twelve months, recent statistics by Google trends ranks Nigeria as the top country. This indicates the massive interest of Nigerians in Bitcoin.
Many Nigerians prefer holding Digital currency like Bitcoin and BUSD compared to the country’s fiat – Nigerian Naira
With the prevalence of blockchain in Nigeria, Nigerians can now perform day-to-day transactions more conveniently via Bitcoin. Additionally, with Bitcoin, international payments and transactions occur much faster. The several benefits of transacting with digital currencies, in preference to the naira, has led to the widespread usage of digital currencies in Nigeria. Several Nigerians see no rationale behind storing their value in naira, considering the harsh economic conditions, when digital currencies exist. The chart below shows the result of a 2020 Statista Global Consumer Survey that was carried out to determine the extent of the usage of cryptocurrencies in 65 selected countries. Nigeria tops the list with about 32 percent of the Nigerian respondents in the survey confirming that they used or owned cryptocurrencies.
The engagement of Nigerians in the transaction of cryptocurrencies, relative to other nations, has undoubtedly been overwhelming. In statistics provided by Usefultulips, a BTC analytic provider, for Q2 2020, Nigeria topped in the amount of BTC transactions in Africa, with over $34.4 million. South Africa, the closest rival, transacted a total value of about $15.2 million, less than half of Nigeria’s transactional value.
The significant interest of Nigerians in digital currencies has attracted the attention of several prominent players in the global business and cryptocurrency scene. “Sad to be leaving the continent…for now. Africa will define the future (especially the bitcoin one!). Not sure where yet, but I’ll be living here for 3-6 months mid 2020. Grateful I was able to experience a small part. 🌍, ” remarks Jack Dorsey, CEO of Twitter and Square, stated, via a twitter post, after his visit to Nigeria in 2019. Unfortunately Jack’s proposed move to Africa was disrupted by the Covid-19 Pandemic.
With the current state of digital currencies in Nigeria, there is a lot of potential for an increased massive engagement in Bitcoin and other digital currencies. Quite a number of Nigerians are flocking towards digital currencies and it will only take a while for the constant depreciation of the naira and the dwindling financial economy of Nigeria to push others to adopt the use of digital currencies as a substitute for the naira.