Cryptocurrency Usage Growing in Nigeria as Economy Struggles
Introduction
According to a report by New York-based blockchain research firm Chainalysis, cryptocurrency usage is on the rise in Nigeria as the country grapples with a weakening currency and soaring inflation.
Nigeria’s Crypto Transactions
- Nigeria saw a 9% year-over-year growth in crypto transactions, reaching $56.7 billion between July 2022 and June 2023.
Uganda and Kenya
- In Uganda, crypto use is smaller but growing rapidly, with a 245% increase to $1.6 billion in the same period.
- In contrast, Kenya experienced a decline of over 50% in crypto use, dropping to $8.4 billion.
Reasons for Increased Interest in Nigeria
Interest in bitcoin and stablecoins surged in Nigeria as the value of the naira plummeted, especially during the extreme drops in June and July 2023. The currency weakened to record lows after President Bola Tinubu implemented significant reforms, including the removal of exchange rate restrictions and the elimination of a costly petrol subsidy.
Quotes from Experts
According to Moyo Sodipo, co-founder of Nigeria-based cryptocurrency exchange Busha, “People are constantly looking for opportunities to hedge against the devaluation of the naira and the persistent economic decline since COVID.”
Nigeria’s Regulatory Environment
In 2021, Nigeria prohibited banks and financial institutions from dealing with or facilitating transactions in cryptocurrencies. However, the country’s financial regulator published regulations for digital assets, indicating a desire to find a middle ground between an outright ban and unregulated use.
Nigeria’s Tech-Savvy Population
Nigeria’s young and tech-savvy population has embraced cryptocurrencies, utilizing peer-to-peer trading offered by crypto exchanges to bypass the ban on financial sector involvement.
Conclusion
As Nigeria’s economy faces challenges, cryptocurrency usage is growing as a means to protect against the devaluation of the naira. The country’s young population’s adoption of cryptocurrencies demonstrates their eagerness to explore alternative financial options.
