• Despite official opposition, Nigerian cryptocurrency adoption is increasing

  • Despite financial authorities’ official opposition, Nigerians are increasingly turning to cryptocurrency use.

    Despite the speculative hype surrounding cryptocurrencies, Nigerians have discovered them to be of far more practical use. Nigerians, for example, use cryptocurrencies for business transactions and to protect their savings as their local currency depreciates. Because US dollars are often difficult to obtain, cryptocurrencies have proven to be a convenient way for Nigerians to send payments abroad.

    “The naira is depreciating, and we’re trying to keep the value of the art,” said Sly Megida, an artist who sells his works using cryptocurrency. Megida also stated that he has buyers all over the world who accept digital currencies, which has protected his finances.

    Ban by the Central Bank

    However, Nigeria’s Central Bank prohibited local banks from dealing with cryptocurrencies in February. The monetary authority has threatened firms accused of using them with “severe regulatory sanctions” and the freezing of their accounts. It froze the accounts of cryptocurrency users in August for allegedly trading with illegal foreign exchange dealers.

    In fact, by March, the dollar volume of cryptocurrencies sent from Nigeria had increased to $132 million. According to research firm Chainalysis, the figure increased by 17 percent in the first month following the central bank ban. From there, transactions continued to rise, increasing by 25% year on year in June.

    Transactions between individuals

    Along with prohibiting banks from doing business with cryptocurrency, the central bank’s ban has prevented Nigerians from accessing traditional cryptocurrency exchanges. Despite this, the shift of many to peer-to-peer systems has had no effect on the growth of cryptocurrency.

    Paxful, one such platform, saw a 57 percent increase in trading volume in Nigeria from January to June, while user numbers increased by an 83 percent. Yellowcard’s use has “continued to absolutely skyrocket” since the country adopted the peer-to-peer model in February, according to the exchange.

    Others are even more resourceful, exchanging cryptocurrency for Nigerian naira or other currencies with people they met on WhatsApp or Telegram. Because of the unregistered transactions, Chainalysis believes Nigeria’s crypto use is likely to be even higher than previously estimated.

    What's your reaction?