Nigeria’s peer-to-peer (P2P) transactions have risen by 25% on a bi-annual basis despite government regulations restricting crypto trading within financial institutions in an effort to safeguard residents and oversee the technology’s progress.
This is a clear indication that many Nigerians have continued to invest in crypto, as evidenced by the underground market. This has further weakened the country’s fiat currency, Naira.
On two prominent P2P platforms (Paxful and Localbitcoins), Nigeria now has $219 million in P2P volumes, followed by Kenya with $92 million and Ghana with $69 million.
According to Paxful, in 2021, Nigeria recorded over 16,000 deals per day across the country. The country’s growing use of digital asset trading is due to a number of factors, one of which is to safeguard against the steep devaluation of the local currency.
A recent Chainalysis Research has re-emphasized this stating that many inhabitants in emerging economies such as Nigeria use cryptocurrencies “to protect their funds against currency depreciation, send and receive remittances, and conduct business transactions.”
In response to the increased trading activity, the Nigerian Securities and Exchange Commission recently issued guidelines on the issuance and custody of digital/virtual assets such as Bitcoins and Non-Fungible Tokens (NFTs) in the country.
Despite recent interventions by the Central Bank of Nigeria, the Naira has continued to decline, with the parallel market closing last week at N610 per dollar, prompting many young Nigerians to invest in Bitcoin and other crypto-assets such as stablecoins.
Citizens also use the flagship crypto for remittance services, in which they trade bitcoin or other cryptocurrencies for Naira OTC. A Nigerian Over-the-Counter (OTC) trader, for example, could offer to buy bitcoin from another Nigerian and pay in Naira. Millions of Nairas are exchanged daily for OTC trades, providing dealers with a steady source of money.
Nigeria is one of the African countries with the highest population as well as the highest number of bitcoin adoptions, according to Statista.