If you look up Bitcoin on Google Trends , you will see that Nigeria is usually ranked the number one country by search interest. But why is this happening if the Nigerian government recently announced a crackdown on Crypto?
Nigeria is a country plagued by social unrest and rampant inflation.
In October 2020, the most populous African nation saw massive public demonstrations against police brutality. After authorities tore into protesters with tear gas and water cannons, 69 people were killed and many more horribly injured.
The Nigerian government reacted by freezing the bank accounts of organizations that were helping protesters. They also froze the accounts of people speaking out against government policies.
The majority of goods purchased in Nigeria are imported. In 2019, Nigeria’s imported goods accounted for $52.5 billion, making it the 50th largest trade destination in the world.
The Nigerian currency is the Naira, which is highly volatile. Throughout 2021, the inflation rate has hovered around 18%. To hedge against this, Nigerians prefer to pay for their imported goods with US Dollars. However, US Dollars are hard to come by.
Money printer go brrrr!
Crypto to the Rescue!
According to the Bitcoin trading platform Paxful , Nigeria is now second only to the US for Bitcoin trading. The Dollar volume of crypto received by users in Nigeria in May 2021 was $2.4 billion, up from $684 million in December 2020.
Despite talks of regulating and banning cryptocurrencies in Nigeria, the market keeps going from strength to strength. Distrustful of banks that can freeze your account, Nigerians are using cryptocurrencies to feed their families, run their businesses and educate their children.
The young and educated population along with increased internet adoption has helped to facilitate the exponential adoption of Bitcoin. The borderless nature of Bitcoin makes it a viable option for making both local and international payments. Cryptofully.com is a great example in this case. Cryptofully allows people to send money to Nigeria using Peer-2-Peer (P2P) networking. The crypto is then converted into Naira. Using the Cryptofully app, users can send and receive crypto, pay bills and earn rewards.
Nigerians are also taking advantage of the Decentralized Finance (DeFi) Industry and using DeFi loans to run their businesses. Being unbanked is no longer a barrier to raising capital and running a business in Nigeria.
Xend Finance is a Nigerian DeFi start-up that enables credit unions to access DeFi for their members by using decentralized stablecoins such as DAI and BUSD. Members can take out loans and earn interest on their savings. In a country that has seen 3 massive currency devaluations over the last 3 years, projects such as Xend Finance offer hope and a way out of poverty for many Nigerians.
‘We target non-crypto users, financially underserved users and users in unstable economies that need their assets to be protected by any means necessary. We are the answers to their prayers’ - Ugochukwu Aronu, CEO and founder of Xend Finance
Foreign ‘Intervention’ (The Good Kind)
One cryptocurrency that has set its sights firmly on the African market is Electroneum , a mobile-based digital payments platform powered by Blockchain. It enables people to send transactions anywhere in the world quickly and affordably. Users can also top-up their mobile phones and pay utility bills using the native coin, ETN. The Nigerian market is a perfect fit for Electroneum. Users are generally young mobile phone users who are keen to adopt new technologies.
The Nigerian government has announced plans to release its own digital currency later in 2021. However, it remains to be seen if this is embraced as enthusiastically as independent cryptocurrencies.