Undoubtedly, the adoption of cryptocurrencies (led by bitcoin), is on the rise across Africa and the continent’s most populous nation, Nigeria, seems to be leading from the front.
A statistics from Blockchain.com puts the global number of bitcoin wallets created so far at 52 million. This same data pointed out Nigeria as the country with the highest flow of activity in recent times, following a recorded 60 percent increase in activity since April. This corroborates the spiking adoption of bitcoin in Nigeria.
In another report from Chainalysis (a blockchain research firm), Nigeria was documented to be on the list of the top ten nations with the highest cryptocurrency use. The report puts Nigeria as one of the fastest-growing crypto markets globally.
Furthermore, the report that declared Nigeria as the second-largest bitcoin market after the United States, circulated Africa’s media space in the previous week.
This report covered the analysis from Paxful, which claims to be the largest P2P bitcoin trading platform in Africa. Paxful analyzed bitcoin’s transaction flow from 2015 to 2020.
The findings from its analysis showed Nigeria to have traded more than USD 566 Mn worth of bitcoin during the period. And thus, by Paxful’s analysis, Nigeria was named the second largest P2P bitcoin market.
One thing that can be grasped from all of these three reports is the similar revelations about Nigeria’s waxing cryptocurrency market. It doesn’t even end there, here is one more.
A data drilled from the trading result from the past week via “Useful Tulips” showed P2P bitcoin trading volumes for that week to top about USD 95 Mn.
A further breakdown by region of this figure revealed that sub-Saharan Africa recorded the second largest trading volume with values amounting to USD 18.3 Mn.
Out of this figure, a substantial sum of USD 10 Mn was from Nigeria. This data thereby puts Nigeria as the largest bitcoin trading country in sub-Saharan Africa. Quite similar to the message in the other reports.
However, all of these data and reports have seemingly left a question hole in many hearts. There now appears to be an ironic puzzle of how, Nigeria, as the world’s poverty capital, tops various global lists on bitcoin usage and adoption. These are valid questions demanding answers.
The ‘whys’ and ‘hows’ of Nigeria’s crypto push
One key thing that can be tied to the spiking adoption of bitcoin and other cryptocurrencies in Nigeria is the changing mindset of Nigerians in general towards them.
In the early days of bitcoin, many years ago, the perception of an average Nigerian towards cryptocurrency wasn’t a positive one. It was thought of as the stuff of scammers and fraudsters, and it didn’t help that it fuelled some Ponzi schemes. Today, this perception is fast-changing.
Another factor in play is the increased awareness and availability of easy-to-use bitcoin platforms in Nigeria. This has in turn played a role in enhancing the mindset change among Nigerians.
International platforms like Paxful, Binance, and Luno, as well as local platforms like Quidax, BuyCoins, and Patricia have been instrumental to this change of course.
Once the mindset issue got solved to a good extent, the increasing adoption documented doesn’t appear to be away from the expectation.
The reason being that Nigeria, as a developing nation, is a country with huge monetary policy gaps, which thereby influenced people’s decisions around cryptocurrency.
The currency instability in Nigeria which has allowed for a periodic devaluation of the naira, as well as the rising inflation, are two economic occurrences that are largely responsible for bitcoin’s wide adoption in Nigeria.
The correlation between currency struggles and crypto adoption is exemplified by Venezuela, for instance, which as a country with pronounced currency woes, is also the top three in the list of top bitcoin users on ChainAnalysis’ list.
This represents an excellent example of the driving force behind cryptocurrency adoption in developing countries and its usefulness in mitigating economic instability.
Another valid case for the increasing adoption of bitcoin in Nigeria is in its usage as a channel for processing remittances.
Pretty much recently, it was reported that the Central Bank of Nigeria (CBN) directed all banks to immediately close the Naira Ledger Accounts meant for the receipt of funds from International Money Transfers Operators (IMTOs). This act has caused many Nigerians in the diaspora to turn to cryptocurrency-powered remittance platforms like SendCash Africa.
It’s a known fact that bitcoin, which is a digital currency, is largely immune to most of these rules and policies, and thereby gives people an alternative to the mishaps of a currency.
Beyond the rigidity and central policies of traditional remittances, bitcoin is also acknowledged as a cheaper and faster way of processing remittances. A win-win, or not?
Lastly, and definitely not least, Nigeria’s large population, in comparison with the rest of Africa, cannot be left out from the other possible reasons for the spiking bitcoin usage in the country.
Nigeria’s large population size has no doubt played a part in the rising trading volumes of bitcoin.
Coupled with the high inflationary environment and the prevalent currency volatility in Nigeria, cryptocurrencies like bitcoin seem to be helping millions of locals to hedge against the local economic shocks and profit off of the crypto price movements.
Featured Image Courtesy: HonestCrypto