- Nigerians are turning to Bitcoin in the face of difficult economic conditions.
- Bitcoin is backing businesses that are unable to obtain the US dollars they need to trade internationally.
- The cryptocurrency is gaining legitimacy as a second source of income, a hedging instrument and a means of financing decentralized protests.
“”Africa will determine the future (especially the Bitcoin) ”, tweeted Jack Dorsey, CEO of Twitter and payment provider Square, on completing a hurricane tour of the continent last year.
Dorsey, loc Bitcoin enthusiasthas concluded that the African nations have the optimal conditions for crypto to thrive in: weak local currencies that make it more difficult to obtain the dollars needed for world trade; complex and costly money transfers and, perhaps most importantly, an enthusiastic, youthful, tech-savvy, and increasingly desperate population.
Nowhere in Africa is this more true than in Nigeria, where Africa leads in trading volume on P2P (person-to-person) crypto exchanges Paxful and LocalBitcoins. The West African Nation (Average age 18) is a Tech Hub;; consistently leads the charts for Bitcoin search queries on Google and loudly a surveyhas the highest percentage of crypto users in the world. Most compelling, however, is the evidence that Bitcoin inventor Satoshi Nakamoto’s original use case for Bitcoin as a means of payment is flourishing in Nigeria.
Bitcoin as a necessity
In Nigeria, Bitcoin is “a necessity as opposed to luxury or that cool thing you might be using,” said Akin Sawyerr, a US-based crypto investor and ecosystem builder who runs the risk log Barnbridge, told Decrypt. “For many people it is basically a lifeline to keep their businesses going.”
Sawyerr, who was born in Nigeria, stated that sub-Saharan Africa is the most expensive place to move money. Now the falling price of oil in the country – a direct result of that Coronavirus pandemic– has sparked economic unrest and led to two devaluations of the Nigerian naira. In November 2020, the nation became official went into recession for the second time in five years.
“Nigeria’s ailing naira currency and the lack of US dollars are forcing companies to switch to Bitcoin to process payments for international transactions,” said Amos Samson, Nigeria manager at Sirocco Pay Decrypt.
Nigerian companies need dollars to buy new supplies and order essential equipment from overseas – but formal foreign currency sourcing sources like banks don’t meet that demand, he said.
The situation is so dire that, according to Nigeria’s leading financial publication Business daySome of the country’s Bureaux De Change (BDCs) – popular currency exchange destinations – have tried to educate their customers about Bitcoin usage because they have failed to meet the high demand for dollars. Their efforts are reportedly bearing fruit now, with many companies Switch to Bitcoin for international trade.
Meanwhile, crypto services – exchanges like Binance and P2P marketplaces like Paxful – have closed the void. In the second quarter of 2020, the weekly trading volume of P2P Bitcoin in Nigeria doubled from USD 8 million to USD 16 million Arcade research. In the first nine months of 2020, new registrations at Paxful more than doubled compared to the same period last year.
“With the devaluation and recession causing the devaluation of naira, individuals and even companies are looking to hedge the value of their funds with a good investment vehicle,” said Nena Nwachukwu, Paxful regional manager for Nigeria Decrypt.
She added that Bitcoin was currently seeing an increase $ 19,000 This week had certainly caught people’s attention. “I now get a lot of questions about Bitcoin from family and friends who were previously not interested in cryptocurrency,” she said.
The Evolution of Bitcoin Adoption in Nigeria
Paxful now has 600,000 Nigerian users, and the way people use Bitcoin has grown too, according to Nwachukwu. Common use cases are cross-border transfers, incoming transfers from the Nigerian diaspora (which have done an impressive job) $ 23.6 billion home in 2018) and paying for school fees, suppliers and freelancers, she said. Bitcoin is now also being used as a second source of income, as a security instrument, and has even financed a human rights protest after banks blocked the organizers’ accounts.
Reports also suggest that more and more merchants are using Bitcoin to pay suppliers. Chinese suppliers in particular would like to do business with Bitcoin because of its speed and convenience. It also means that Nigerian companies will no longer have to buy dollars with naira or pay fees to money transfer companies.
Nwachukwu points out that interest in cryptocurrency has grown the fastest among millennials. Nigeria’s young, entrepreneurial-minded population has contributed to its success as Africa leading investment destination for startups in 2018.
But the majority of young people are either unemployed or underemployed and often without a bank account. Even those lucky enough to qualify for a bank account will be hampered by spending limits, which can be unreasonably low, or find their Nigerian IP addresses blacklisted, Sawyerr said. Bitcoin and Stable coins, which are pegged to the dollar and easy to withdraw, have proven their salvation, he added.
Nigerians last summer more bitcoin.com wallets downloaded MetaMask Mobile, a wallet for Ethereum-based products, is also very popular. Nigeria is MetaMaskJacob Cantele, who heads the business at MetaMask, is the third largest market after the USA and India Decrypt.
How Bitcoin Gained Legitimacy in Nigeria
According to Luke Anthony, overseas manager of Chinese financial services startup GetBit, many Nigerians have avoided doing online business in recent years because of the predominant social-financial, quick-get-rich and Ponzi programs like MMM, Twinkas, and others. The scams have tainted cryptocurrencies’ image in the country, he argued – but recent events have given Bitcoin a dash of credibility.
Last October, reports of police brutality sparked mass protests after Nigeria’s much-hated Special Anti-Robbery Force (SARS) allegedly killed a young boy.
The police unit is standing accused Extortion, torture and murder. Many of the target groups are young men who work in the technology industry. Yele Badeosi, CEO of the Binance-powered payment app Bundle up, recently shared his own terrifying encounter with SARS.
While the hashtag #ENDSARS went viral in October, Bundle and other Nigerian startups and organizations raised money for the decentralized protests which spread across the country. But some groups of local activists, like that Feminist coalitionhad their bank accounts frozen. In desperation, they turned to Bitcoin. Donations flowed in, and Jack Dorsey even advertised the matter on Twitter. Ultimately, the group raised over $ 150,000 in Bitcoin – more than 40% of their total funds.
“During #ENDSARS, many people were introduced to the uses of crypto and bitcoin for the first time,” said Bathosi the breakdown podcast recently. “They learned, ‘What is Bitcoin? How to buy and send Bitcoin, what is an address? This has brought Bitcoin even further into the mainstream.
“The truths were presented at the end [of the] SARS movement, ”said Anthony. “People also had to learn that most teenagers get paid through Bitcoin – online businesses like freelancers. Many videos have been made showing that not all teens are fraudulent businesses but are likely to be working hard to earn online or to work with overseas companies. “
Bitcoin first launched in Nigeria in 2014 but is now much more popular, he said. Leading brands, advertisers and influencers are taking advantage of the prevailing Bitcoin macro trend and this year Nigeria got its first crypto ATM.
The future of Bitcoin in Nigeria
The plight of the naira, the aftermath of the pandemic, and the effectiveness of Bitcoin have all helped bring cryptocurrency to the fore in Nigeria. But what does that mean for the future?
Unsurprisingly, Nigerians’ silent rollout of Bitcoin has not escaped the attention of financial authorities. The country’s Securities and Exchange Commission recently ruled that out All cryptocurrencies are considered securities.
And there are signs that more regulation is in sight. The publication of a Draft of a framework for a national blockchain adoption strategy in October brought hope that such a move could revive the economy.
“Nigeria has a better chance of getting to the top if it transforms and adopts blockchain,” said Anthony. “We have many [natural] Resources, and if the government can incorporate blockchain through Nigeria oil, it might be easier to support [the] Naira, and bring you more mass adoption too. “
The framework includes comprehensive oversight of the supervisory authorities. However, observers like Sawyerr believe that restrictive regulations make no sense in the current economic climate and that the new rules are unlikely to have teeth due to a lack of resources.
Banning Bitcoin would mean destroying businesses and economic growth as there aren’t enough foreign currencies to meet demand. He said, “It really doesn’t make sense to squeeze the market if Bitcoin finds a solution in the Nigerian case, real problem for people. “
Africa’s crypto trading volume is only tiny overall two percent of the global volumeBut the advent of bitcoin and other cryptocurrencies is creating life-changing value here when compared to other regions, Sawyerr said.
“I don’t want to underestimate how big that is,” he added. “People are allowed to do business in which they could not before. It has allowed young people to have some level of sovereignty and independence, and it has enabled them to create value – to get paid for it that way – which is huge. ”