Stiffened Regulations, Naira Devaluation Pushing Nigerians to Crypto
- Nigerians are embracing cryptocurrencies owing to stiffening regulations
- Cryptocurrency usage is all-encompassing
- The surge could drop as the economic effects of the pandemic ease
- More education is needed to capture all age demographics.
Around the world, the acceptance and utilization of blockchain technology and its underlying cryptocurrencies has become more imperative. With the surge in the number of bitcoin (BTC) and altcoins users, it could be presumed that people are now more aware of the possibility of attaining financial autonomy.
For economies with fiat currencies that are prone to frequent devaluation like Nigeria, the embrace of digital currencies has grown in recent times. A recent survey from statista.com encompassing 65 countries showed that Nigerians were the most likely to say they used or owned cryptocurrency. The oil-rich sub-Saharan African nation topped the chart with 32%.
Speaking to Cryptonews.com, Effort Etinosa Onoboh, an independent bitcoin trader and investor said that the ranking is "nothing unexpected," as the masses are recognizing the revolutionary capabilities of blockchain technology.
"Stiffened regulations coupled with the incessant devaluation of the Naira has made cryptocurrencies a viable option for all."
In this import-dependent nation, the Central Bank of Nigeria in its powers is always revising the dollar spend limit both home and abroad, and Onoboh believes that these restrictions will always "hinder businesses and transactions." This is a major reason why people turn to cryptocurrencies as the best alternative.
The Usage of Cryptocurrencies is All-encompassing
As an investor in the cryptospace, Onoboh said he believes that the usage of bitcoins and altcoins is not segmented as most people might think. He explained that the usage of cryptocurrencies is all-encompassing and not just a go-to-asset to transfer funds between family members in different countries.
He noted that Nigerians are mostly in search of "a financial instrument that is free, fair and open to the whole world," and as this is what bitcoin offers, the masses are going all out for it. The journey to the growing embrace of digital currencies by Nigerians did not come readily though, as the masses were sceptical of the cryptocurrencies' potentials just a few years ago.
"Back in 2016, BTC holders are always in search of who will buy their bitcoins from them in the country, and in 2020 today, the narrative has changed and we now have people owning their own native cryptocurrencies (tokens). So from people holding cryptocurrencies as a store of value, to people seeing cryptocurrencies as an investment, to people seeing them as a means of payment, the usage of cryptocurrencies has become all-encompassing."
The surge is fuelled in part by freelance activities
As a member of the Organization of Petroleum Exporting Countries (OPEC), Nigeria’s petroleum profits, since crude oil was discovered in 1956, have not helped improve the country’s unemployment woes. Tagged a perpetual economic challenge, the Nigerian youth have turned to freelance activities as a means of livelihood.
Contrary to a general school of thought that the surge in cryptocurrency activities may have been impacted by cybercrime, Onoboh and other entrepreneurs believe otherwise. David Ebi Akraka, the founder and CEO of IBEDA Nigeria Ltd, a renewable energy firm, told Cryptonews.com that the surge in crypto stirred by cybercrime is negligible when compared to that stirred by freelancers.
“We do have cybercrime in Nigeria, but it is not only in Nigeria, it is also everywhere in the world so we cannot keep it to Nigeria alone,” Akraka said, adding:
“I believe there are a lot of freelancers working with foreigners in Nigeria and foreigners would rather pay with crypto than having to spend money transferring to local currency and incurring different bank charges. So I can’t categorically attribute the surge to cyber crime alone as there are other genuine business transactions and freelancers that I believe contributed to it.”
This position may be plausible as data from the Nigerian Bureau of Statistics (NBS) puts the country’s unemployment rate in the second quarter of 2020 at 27.1%, a period which may overlap with the Statista.com survey.
Nigeria’s embrace for cryptocurrencies: how sustainable is it?
For a country that is known for performing low in major ranking indices among the league of nations, being the top ranking in the Statista survey comes off as a major thrill. The question of sustaining this growth remains a major factor to consider.
Ever bullish on the potentials of cryptocurrencies and its growth in the country, Onoboh stated that:
“we can sustain this momentum because a lot of Nigerians have tested freedom, Bitcoin is freedom and we are not going back. It is from here onward.”
Meanwhile, Akraka said that the surge in cryptocurrency activities will reverse. He noted:
“When the COVID-19 pandemic is over, the activities will definitely drop. Though I don’t know how much it would drop or how drastic it would be, as foreign exchange inflows will bring back relaxed regulations on international transactions, a major reason why the Nigerian millennials switched to cryptocurrencies in the first place”.
Despite the ranking though, many analysts find that Nigeria has a long way to go with regards to blockchain and cryptocurrency adoption as the surge in crypto usage is mostly among millennials. But with improved regulations and awareness, the older generation might come to appreciate the potentials of digital currencies as well.