Even after the central bank’s crackdown on Bitcoin investors, people still come up with ideas to engage in the digital currency market
Nigeria is on its path to score big time as a digital economy. But the government and the central banks are heavily against the crowding of people in the Bitcoin accords. They call the digital mode of investment a sloped area and fear that it could further loop Nigerians into poverty if something goes wrong. Even after taking the initiative to ban the Bitcoin investment in the country, people are still coming up with out-of-the-box solutions to engage more in the digital coin market.
Nigeria is a country where people live between the line of poverty and trying to get out of financial troubles. Most of the young people in rural areas are shifting to the capital Lagos with the hope to earn a living. A lot of them hope for life at ease once they set foot at the capital. But little did they know that their life at the rural place is going to reflect at Lagos with an urban twist. People who migrate to Lagos undergo the same stress of barely making ends meet. However, the emergence of the cryptocurrency market has made Nigerians think otherwise. Cryptocurrencies, the talk of the town has emerged as a subset of alternative currencies to fiat currencies. Representing money in digital form, they differ from conventional currencies as well as digital payment services or mediums. Formally introduced in 2009 with the advent of Bitcoin, cryptocurrency found a safe haven among Nigerians.
According to a survey conducted by Statista in 2020, it was revealed that 32% of Nigerians are users of cryptocurrencies, the highest proportion of any country in the world. Estimates show that of the top 10 countries for trading volumes, Nigeria ranked third place after the US and Russia in 2020, generating more than US$400 million worth of transactions. In the last five years, Nigeria has traded 60,215 bitcoins, valued at more than US$566 million. While we looked into the reasons why Nigerians are investing in the Bitcoin market, the truth is unfolded that the people believe in some of the Bitcoin success stories and invest in them. Besides, Bitcoins are competing on the global accords even when the value of naira falls against the US dollar.
Bitcoin stole the stage during #EndSARS
EndSARS protest was a global sensation in 2020. But less was spoken about how the Nigerians managed to fund their motive despite the government’s crackdown on protestor’s bank accounts. When the people were fighting against police brutality in the country, supporters donated for the cause. The government came to know about this and froze the bank accounts of the leaders of the moment. However, supporters found a way out with Bitcoin. They began donating Bitcoin to fund the EndSARS motive. Following this, in February 2021, the Central Bank of Nigeria released a letter addressed to banks and financial institutions which stated that dealing in cryptocurrencies and facilitating payment for cryptocurrency exchanges are prohibited. The CBN also stated in the Press Release that cryptocurrencies are issued by unregulated and unlicensed entities and as such, the use of cryptocurrencies in Nigeria contravened existing law as they are not legal tender.
However, young Nigerians found different ways to deal with the crisis. They use overseas bank accounts to easily revert to peer-to-peer transactions. This means that rather than transferring funds between financial institutions and a cryptocurrency online trading platform, investors transfer funds directly to each other or through a middle persona as they buy and sell.
This is not the first time the central bank is taking the initiative to control the cryptocurrency movement in the country. They have earlier banned banks from facilitating cryptocurrency-related transactions in 2017, but the ban was leniently implemented leading to a big fail.
Dollar shortage is a contributor to Bitcoin adoption
Africa’s giant oil economy faced the dollar shortage due to a sharp fall in oil prices. This has challenged the naira’s value in the global market. Additionally, local banks in the country have also restricted transactions with hard currency, mostly limiting customers to withdraw less than US$100. They can’t purchase international products because of the increasing value of the dollar to their naira, meanwhile, they can’t exceed the US$100 limit. Henceforth, Nigerians are embracing Bitcoin to address these financial challenges.