Nigeria is one of the largest crypto economies in the world. With Africa’s largest population, Nigeria has the ideal market for cryptocurrencies. At the same time, this population is made of highly skilled individuals who are unemployed. They also have access to internet services with limited banking facilities.
All these factors have worked to place Nigeria as one of the leading crypto adopting countries. Cryptos like Bitcoin have been a revelation, covering the shortcomings of traditional financial institutions. For example, Bitcoin was the main platform for fundraising during the #ENDSARS movements.
While the country was set to become the crypto hub of Africa, it was with a sudden shock that the Nigerian government banned crypto transactions early in the year. This came at a time when the country was struggling with some of the highest poverty levels following the coronavirus pandemic. The reduced trading activities like exports and imports due to lockdown and other control measures have seen thousands of the population lose their jobs. There are indications of Nigeria’s unemployment rate hitting over 35% in the next year.
Crypto stands the best chance at saving Nigeria’s economy. Here’s how;
Hedge against inflation
Nigeria has struggled with hyperinflation over the previous years, with the national currency losing more than 100% value since 2015. Crypto provides the best option for the preservation of wealth and wages.
Given inflation in Nigeria is an ongoing process, and likely to continue, storing money in the form of fiat is a losing game. The better option is the cryptos that do not conform to the national money movement.
Other than a store of wealth, the cryptos also act as a form of investment. Instead of letting money waste away, putting them in cryptos comes as a form of trading with possible profits.
Remittance platform
Nigeria has one of the largest populations of people living outside the country. This population is resorting to cryptos as a way of sending money back to the country. The Nigerian financial system works such that any money sent to the country is highly scrutinized. The banks are directed to report any activities.
Furthermore, such transactions take a long time before the receiver gets the money. Let alone the inaccessibility of the services. Even though the country has over 3000 money transfer services platforms, only 3 support cross-border transfers.
Crypto platforms like Bitcoin and Ripple provide the ideal platform to transfer money instantly. Such transactions have formed the country’s rising peer-to-peer crypto transactions. The trading volume of the P2P crypto transactions in the first half of 2021 hit $205.7million.
What is the future of cryptos in Nigeria?
No matter the restrictions the government puts on crypto trading in the country, digital currencies are an idea whose time has come. The only way the government can control crypto is through banks. However, most people prefer peer-to-peer trading platforms. These platforms have been thriving in recent years and will keep on developing as the country becomes more crypto recipient.
In the long run, the Nigerian government might be forced to introduce clear regulations on crypto use in the country.