NIGERIANS BAG MORE THAN 50% OF AFRICA’S CRYPTOCURRENCY
CRYPTO BOOM AMIDST GOVERNMENT REGULATIONS
It is easy to ascertain why cryptocurrencies are becoming a beautiful alternative to traditional currencies, especially in economies beset by double-digit inflation and economic uncertainty. Bitcoin and other altcoins promise to offer individuals more financial autonomy and may be significantly less restrictive and more accessible than traditional financial channels. Keeping this general context in mind, this text tells the story of how Nigeria has become one of the fastest-rising crypto economies within the world.
NIGERIAN DOMINANCE IN THE AFRICA CRYPTO SPACE
Recent market trends have shown that Africa has the potential to emerge as one of the world’s most efficient regional markets for cryptocurrency. Nigeria as one of the region’s member states is already showing a promising front to this end.
Several reasons can be attributed to this claim, factors including persistent currency inflation, youthful population, daily increase in the cost of consumer items, and the poor service of the banking industry.
It shouldn’t be surprising that a list of African countries has been featured as members with a high interest in Bitcoin. Nigeria is currently leading the continent in terms of Bitcoin peer-to-peer trading volumes at the forefront of Africa’s crypto renaissance. The country accounts for nearly 50% of the continent’s trading activity, with over $8 million worth of Bitcoin trades averaged weekly on LocalBitcoins and Paxful. Naira, Nigeria’s fiat currency is also first Africa’s currency to be featured on the Binance P2P system.
It is important to note that Nigerians’ interest in Cryptocurrency tends to trail behind the price gain of various digital assets. Nigeria’s strength in Africa’s crypto-economy is further indicated by the fact that Nigerians contribute the highest number of bitcoin-related searches on search engines.
The 2020–21 upward market has therefore undoubtedly had a positive impact on the adoption of crypto in Africa’s largest economy. However, we can’t attribute Nigerians’ interest in crypto to cost movements alone. Other factors can also be attributed to the country’s soaring rates of cryptocurrency adoption.
Despite the unseen growth of Nigeria’s crypto market, there are currently no bitcoin mining facilities in the country. This can be attributed to the inadequate power supply in the country and the lack of in-depth crypto education in the country.
REASONS FOR THE EXPLOSIVE GROWTH OF CRYPTOCURRENCY IN NIGERIA
Taking a look at the present terms and conditions, the outbreak of the Covid-19 pandemic and the unstable oil market of the economy are the two biggest reasons behind the hike in cryptocurrency in the country. This coupled with other socio-economic challenges has shifted the focus of Nigerians to the cryptocurrency space.
Unemployment is another biggest factor for the crypto surge in the area. With a dwindling and constantly decreasing oil economy, the country has been ravaged by unemployment and scarcity in major cities and areas, pushing the citizens to look for other sources of financial opportunities and services.
Inflation has a role to play in the involvement of more Nigerians in cryptocurrency. With the ever-increasing prices of goods and services, more Nigerians are searching for alternative sources of finance and investment and cryptocurrency offers them this opportunity. They use crypto investment and activities as a way out of the persistent inflation the country suffers.
The budding crypto community in Nigeria has all the more reason to participate in cryptocurrency as the Central Bank of Nigeria moves to devalue the Naira. Bitcoin and other stable coins are used as a means to preserve their savings.
Another contributing factor is the existence of forex restrictions imposed by the Nigerian authorities as a bid to scale back the outflow of U.S. dollars. In extreme cases, centralized bank users are restricted to debit cards transactions as low as $200 per month. Bitcoin can therefore offer how to bypass these restrictions when it involves cross-border transactions.
In terms of demography, crypto adoption in Nigeria is undoubtedly helped by the predominance of a young, vibrant, and tech-savvy population and the increasing use of smartphones. The adoption of new technologies and cryptocurrencies among the youth was apparent in October 2020, when nationwide protests against police brutality were partially funded via crypto donations.
LEGALITY OF CRYPTOCURRENCY IN NIGERIA
As with other African countries, there are no definitive rules that govern cryptocurrency in Nigeria. The Central Bank of Nigeria has a standing that it doesn’t approve cryptocurrency as a legal tender. It has recently banned the involvement of financial institutions and banks from dealing in cryptocurrencies.
CONCLUSION
Now on P2P platforms, trading activities have continued to thrive since the onset of cryptocurrency in the region. All indications point that the crypto market in Nigeria will continue its upward trajectory. Nigeria’s rising crypto adoption rate rises from the profound need for an alternative financial system that can help citizens avoid the impact of an unstable fiat currency and persistent inflation in the national economy.
