Bitcoin has offered many Nigerians a solution to fundamental economic challenges. The ban from the country’s central bank won’t change that.
Back in 2017, the idea of Bitcoin in Nigeria was an interesting one that generally got the attention of two main categories of people: the early adopters with an interest in emerging technologies and the “hustlers” that are always on the lookout for new ways to make money. The latter category consisted of the same people that turned to the Mavrodi Mundial Movement (MMM), one of the world’s largest Ponzi scheme, when it became popular in 2016.
Unfortunately, the average Nigerian has struggled greatly in the country’s current economy, and many have been forced to seek out alternatives that offered tangible opportunities to make money. When cryptocurrency exchanges started to show up in Nigeria, they made buying and selling bitcoin more convenient for these categories of people, because the alternative was to buy bitcoin from a stranger with no assurance of getting what you paid for. And, as a result, the country’s cryptocurrency community began to grow.
Bitcoin’s Rise In Nigeria
The booming cryptocurrency market in Nigeria today has come a long way from those early days as the adoption rate in Nigeria, Africa’s largest economy, keeps growing year after year. A major reason for the exponential growth of the Nigerian cryptocurrency community can be linked to the country’s predominantly young population — it is significantly more tech-savvy than its parents, and it has taken to the internet in hopes of finding jobs and income that often prove fleeting at home.
Understandably, the young population went digital in its pursuit of a better life. Many younger Nigerians became freelancers in their chosen fields and started offering their services to the international community where their work is valued. But, once again, the challenge of getting paid for their work because of their location was difficult. In the same vein, Nigerians in the diaspora also experienced a similar challenge when sending money back home, as exorbitant charges from foreign banks and money transfer companies discouraged many from doing so.
Meanwhile, things kept getting worse for the average Nigerian, with the naira experiencing incessant inflation, making the country’s fiat a poor store of value; traditional banks charging ridiculous fees for simple transactions; and a rise in the unemployment rate. In the midst of all of these issues, the gospel of Bitcoin kept spreading as the foremost cryptocurrency’s major features made it look like it was specifically designed to save Nigerians.
Why Bitcoin Is Successful In Nigeria
Bitcoin’s decentralized features, its ability to furnish cheaper and faster transactions and its rising value ultimately turned the attention of many Nigerians to it, so that in a 2020 COVID-19 halted world, Bitcoin had finally found a home in Nigeria. And this reflected in the numbers, as our cryptocurrency exchange, Yellow Card, processed over $200 million in cryptocurrency volume in 2020, with most of that volume coming from Nigeria. Blockchain.com also reported that there was an increase from Nigeria in the number of new Bitcoin wallets created on its platform.
Bitcoin offered the glimmer of hope that many Nigerians desperately needed as they could finally see the chance of attaining financial freedom to be more likely than ever. And, in the following ways, Bitcoin has become successful in Nigeria:
- As a store of value: The naira’s continuous inflation has made many lose confidence in keeping their hard-earned money in fiat. Bitcoin offers a better alternative as its adoption across the world increases, thus driving up its demand and, consequently, its price.
- As a better investment alternative: Many Nigerians have turned to trading and investing in bitcoin as a form of passive income and, despite the cryptocurrency’s volatile nature, the returns over time have seen many become millionaires.
- As an enabler of easy transactions: The sending and receiving of money across the border for the payment of goods and services, or to loved ones, has never been easier with bitcoin, thanks to its cheaper network rate and faster transfer time than traditional remittance systems.
While a recent directive from the nation’s apex bank reiterating that regulated financial institutions are not authorized to offer services to cryptocurrency exchanges, the interest in Bitcoin has only continued to grow in the country as, coincidentally, institutional investments have propelled the price of bitcoin past $57,000, as of the third week of February.
It is, therefore, no longer a matter of if Bitcoin will continue to bloom in Nigeria, but a matter of how long before it reaches everyone in the country. The Central Bank of Nigeria’s directive may take some exchanges in the country offline for the time being, but peer-to-peer transactions, which have always been an extremely popular and active trading method in Nigeria, will only grow more quickly.
This is a guest post by Joel Ogunjimi and Chris Maurice. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.