Today denotes the third bitcoin splitting, and BlockNewsAfrica is taking a gander at the most energetic digital money showcase in Africa, Nigeria, in our Journey So Far Series.
Nigeria – Background
Nigeria, the most crowded nation in Africa has seen some colossal development in the premium and selection of Bitcoin throughout the years with the Q1 2020 Crypto advertise client patterns report discharged by Coinmarketcap refering to Nigeria as the second nation with the biggest youth client development.
The nation is home to more than 180 million individuals with 65% of them younger than 25, a youthful customer advertise. It has been named a versatile driven economy with more than 120 million individuals utilizing the web, most of them are on cell phones, much obliged to the effect of moderate Chinese telephones.
In the mid 2000s, there was a desperate requirement for quick worldwide exchanges among online customers, bloggers, guardians sending cash to another country to their children, people getting cash from abroad, and then some.
The current cash move administrators – Western Union, MoneyGram, were moderately too delayed to even consider processing installments and had such a large number of layers of security for normal individuals to utilize. A few computerized installment frameworks emerged to give arrangements that were required, for example, E-gold, the principal advanced cash altogether upheld by gold and silver however was met with a progression of grievous occasions that saw the record suspension of clients in high-hazard nations including Nigeria, where numerous individuals lost their cash.
Freedom hold was another famous installment framework that accumulated a huge number of clients yet was at last closed down in May 2013 by US government investigators for tax evasion charges leaving a large number of Nigerian clients sad. PayPal entered the Nigerian market in 2015, permitting Nigerians to send cash yet accepting cash is as yet confined.
Bitcoin’s Rise To Fame
Bitcoin has been slowly building a following in Nigeria by early tech enthusiasts and tech experts since its inception in 2009. The year that saw the rise of bitcoin was 2016/2017 during the peak of Ponzi schemes and HYIP (high yield investment programs) such as MMM founded by a Russian named Sergey Mavrodi, Get help worldwide, Cryptoshare and more.
These Ponzi schemes promised unrealistic returns and used Bitcoin as a payment option. The news spread like wildfire across the country with Google reporting Nigeria to be one of the countries with the highest search volume for Bitcoin.
However, the fame was short-lived when the Ponzi schemes shut down, leaving millions of people in debt. This painted a negative picture of Bitcoin, with people regarding it as a scam due to the lack of education.
P2P trading has been fiercely popular in Nigeria from the early days to date. The problems mostly associated with P2P trading are high levels of risk & high rate of trade above the general market levels. Due to this, some users in Nigeria hold the view that exchanges are a better option.
One of the oldest exchanges in Nigeria is Nairaex, which became the go-to exchange during the bull run in 2017. Nigeria is an enormous market with a youth-driven culture – the most receptive age group to digital innovations.
The large market has caught the interest of several foreign companies such as:
Paxful, one of the largest P2P trading platforms, reported Nigeria to be its largest market with a trading volume of over $5 million in the last 7 days. Paxful is the choice of exchange for trading of iTunes card, amazon card, steam card, and other cards. Certain reports have claimed Nigerians are using gift cards as a form of remittance by sending iTunes cards to their loved ones who sell it for Bitcoin on Paxful.
Nigeria owned exchange, Bitfxt, established in 2017 to solve problems related to Bitcoin trading reportedly raised a staggering $15 million to expand its operations. The exchange has a mobile app to enhance the ease of trading.
The large demand for Bitcoin has prompted the need to create more channels to buy and sell the popular cryptocurrency. Nigeria only got its first Bitcoin ATM in 2020. The ATM is expected to provide more access to trading Bitcoin and to further enhance the financial inclusion of both the unbanked and underbanked.
Several other cryptocurrency projects have taken interest in the blockchain/crypto loving country and have built communities of supporters e.g. Dash Nigeria, quidax, FlashCoin, Decred Africa, Huobi Africa, EOS, etc. They all have the common interest of educating Nigerians about blockchain technology solving various problems in the country with their respective unique features.
Remittance And Store of Value
Remittance inflow from the diaspora into the country in 2018 was estimated at $28 billion, nearly equivalent to the crude oil sales for the same year. International money transfer services such as Western Union, MoneyGram charges ridiculous fees to process payments that take days to weeks to settle.
Western Union recently suspended Nigerians from receiving money from abroad, a huge blow for a country largely dependent on remittance. Citizens have been using bitcoin as an alternative option which is relatively faster and cheaper to use.
Binance- invested Ghanaian start-up Bitsika, has leveraged on the remittance problem to build a crypto-based remittance payment system for sending money across borders and is growing exponentially.
The Nigerian naira has lost over 60% of its value since 2014, due to inflation and devaluation. Bitcoin has become a popular choice for a store of value due to its deflationary attributes.
One of the major reasons Bitcoin has been a formidable challenger of fiat currencies is its supply reduction mechanism called ‘’halving’ that happens every 4 years or 210,000 blocks. It reduces the block rewards by half, 6.25 Bitcoins will be the next block reward after the upcoming halving, thereby reducing the supply of Bitcoin making it scarce – a true feature of money.
Bitcoin halving is happening today and the future that awaits it is truly glorious as it will make Bitcoin the scarcest asset on earth.
There are Nigeria communities working behind the scenes to push the adoption of Bitcoin and protect its reputation. The three most notable ones are SIBAN (Shareholders in Blockchain Association in Nigeria), a self-governed community, CampusBCAT (Campus Blockchain and Cryptocurrency Awareness tour) by Cryptotvplus and Blockchain Nigeria User Group.