If there is one country whose citizens have wholeheartedly embraced the Bitcoin craze that has swept through much of the world in the last couple of years, it’s Nigeria. While millions of people in dozens of counties are actively involved in the mining, trading, and spending of this rapidly emerging cryptocurrency, Nigerians have raised these activities into something of an art form. An average of around $4.7 million a week in Bitcoin is traded between private citizens in Nigeria, up from a mere $300,000 a week just last year.
A walk down a busy street in the bustling central business district of Lagos will confront you with dozens of street vendors, hustlers and small-time traders offering the best rates on Bitcoin, as well as plenty of scams promising to get you in early on a number of completely fictitious cryptocurrencies. While the Nigerian government has been quite slow on the uptake, the people of Nigeria have embraced the emerging technology of cryptocurrencies with an energy and zeal that you won’t find anywhere else.
The current Bitcoin situation in Nigeria is the result of a number of external factors, not least the financial crisis of 2016 which has utterly eroded much of the value of and trust in the country’s currency, the Naira. Let’s take a closer look at the position of Bitcoin in Nigeria in 2018, to get a better idea of what the future holds for this currency and this country.
Nigeria and Bitcoin: A History
In 2017, at the height of the Bitcoin gold rush, it was revealed that the highest number of Google searches for the word “bitcoin” of any country came from Nigeria. The daily volume of Bitcoin trading in Nigeria is on a similar level to those seen in China and India, countries with vastly larger populations that are arguably much more well-known in the global media for tech-savviness.
The history of Bitcoin in Nigeria began in earnest during the economic crisis of 2016, which saw the value of the Naira collapse and the Nigerian government and central bank (CBN) step in to impose currency controls. The rapidly deteriorating financial situation meant that the local currency essentially lost its worth and made it more difficult for businesses to complete transactions. Bitcoin primarily emerged during this period as a workaround solution to the strict currency controls put in place by the CBN to stop Nigerians hoarding dollars and euros and participating in the foreign exchange, an activity which many small businesses depend on to survive.
Bitcoin, therefore, emerged as an alternative currency in a time of crisis. Following this, bitcoin trading exploded as thousands of Nigerians already holding reserves of it began to notice the astronomical value increase over the course of 2017. A gold rush was triggered, and hundreds of scam agencies claiming to be legitimate bitcoin exchange providers stepped in to take advantage, with the most famous one being the notorious MMM Pyramid Scheme that emerged in Nigeria and Zimbabwe, another country experiencing a severe currency collapse.
In 2018, things have settled somewhat, and the gold rush has slowed to a trickle. More and more legitimate businesses are accepting bitcoin as a form of payment, and a reliable cryptocurrency infrastructure has emerged in Nigeria.
Bitcoin Offers Solutions to Nigeria’s Problems
While the primary appeal of bitcoin for many is the prospect of getting rich quick by taking advantage of price rises, the currency also offers innovative solutions to problems that have plagued Nigeria for a long time. As well as emerging as a helpful alternative to a useless fiat currency, it has also offered more unexpected solutions to everyday problems.
One of the largest sources of revenue for millions of Nigerian families comes in the form of remittances sent from family members working in richer countries abroad, typically the US, Europe, and the UAE. These flows of dollars, euros and dirhams are a vital source of income, one that tends to be significantly diminished by international transfer fees. Bitcoin does not require the services of a bank, meaning that remittances sent to Nigeria from abroad arrive in full, instead of having up to 20% shaved off by brokers.
The rapid flooding of bitcoin into the country has resulted in a flourishing bitcoin infrastructure that far outstrips that of many Western countries. Small businesses and startups across Nigeria now trade in and accept bitcoin, fully equipped with the technology needed to easily facilitate such transactions.
Traders at street-side stalls in Lagos are able to take advantage of Nigeria’s highly developed mobile infrastructure in order to trade bitcoin via their smartphones. Nigeria has one of the highest levels of smartphone penetration in Africa, allowing a significant proportion of the population to take advantage of blockchain technology. Mobile-friendly platforms have been able to flourish, with Nigerians now being able to use their smartphones to even gamble with bitcoin at online mobile casinos. The fact that these days Nigerians are using their phones to play online roulette for real bitcoin on the bus ride to work, when, just a couple of years ago, cryptocurrency was a nonentity in the country, shows how rapidly things are changing.
What the Future Looks Like
How the future of bitcoin plays out in Nigeria depends largely on the role that government regulators decide to play, or not play, as well as the future performance of the Naira. Rumours are swirling that the CBN is due soon to come down hard on bitcoin, following a recently released statement in which the bank warned against the dangers of using it and claimed that it could be used to fund crime and international terrorism.
The widespread adoption of bitcoin obviously undermines the authority of the Naira even further, so it is unsurprisingly that the central bank would come out against it. Regardless of whatever regulatory path that the CBN decides to take, the enthusiasm with which bitcoin has been greeted among Nigerians of every income level show that the appetite of cryptocurrency will prove difficult to curb.