Nigeria is forging on with crypto despite regulatory hurdles

 Nigeria’s cryptocurrency industry has been on an uphill trend in the past few years, and it’s showing no sign of regression. This is despite the country’s central bank issuing constant warnings to the citizens, asking them to steer clear of cryptos. The latest industry reports indicate that this trend is set to continue in 2020.

Africa’s biggest economy, Nigeria, has been a leader in the crypto industry in Africa for years now. Its vibrant crypto industry has also seen it claim the top spot for Bitcoin searches on Google globally, ahead of established crypto hubs such as the U.S. and Japan.

In its annual market report, the Chartered Institute of Bankers of Nigeria (CIBN) noted the continued rise of cryptos, stating, “The CBN has also declared that digital currencies are not legal tender with naira as the sole legal tender. There are concerns on the use of other digital currency which is currently changing the global payment ecosystem.”

For Nigerians, cryptos offer hope of a better, more accessible and efficient financial system. Despite being the largest economy in Africa, the country has over 60 million citizens with no access to formal banking services. And while other African countries have sought to go around this through the use of mobile money, Nigeria hasn’t had much success with this either. According to the World Bank, only 6% of Nigerians use mobile money. This makes Nigeria a perfect market for crypto.

While the Nigerian Central Bank has discouraged its citizens from using cryptos, the country’s Securities and Exchange Commission (SEC) intends on integrating cryptos into its capital market. The SEC has set up a committee that will work on a regulatory framework for cryptos. It will look into issues such as investor protection, maintaining the integrity of the financial market and ensuring financial stability.

Crypto trading platforms in Nigeria have continued to see increased activity, with Paxful being one of the leaders. The exchange, which hit 3 million wallets recently, revealed that Nigeria continues to be one of its leading markets.

Twitter and Square CEO Jack Dorsey recognized the great potential the West African country has as a crypto hub. In his recent visit to Nigeria, he attended crypto meetups, later stating that he believes Africa will determine the future of crypto.

By Steve Kaaru

Coinggeek

Video - Nigerian returns bitcoins worth $80,000

A Nigerian man who found $80,000 worth of bitcoin had been mistakenly transferred to him, returned them to the owner. Keith Mali Chung woke up to find 7.8 bitcoins in his account.

That is the equivalent of $80,000 or €72,302. He immediately began trying to track down the owner of the bitcoins. Bitcoin is the original digital currency that is exchanged between users online. "I trade in bitcoin, but never such a high amount," Mali Chung explains on the phone from the Nigerian capital, Abuja and continues, "I knew it had to be a mistake so I posted an announcement via some WhatsApp groups to track down the owner."

Three days passed and no-one responded, so Mali Chung took to Twitter. That prompted a response from someone who had the correct encryption code for the transaction.

The owner of the bitcoins mistakenly transferred to Mali Chung is a Nigerian politician who has asked to remain anonymous. Nigeria is plagued by political cronyism, and consistently ranks among the lowest 20 percent on Transparency International's Corruption Perception Index. In June, the Paris-based Financial Action Task Force announced that cryptocurrency firms will be subjected to rules to prevent the abuse of digital coins such as bitcoin for money laundering.

The move by FATF, which groups countries from the United States to China and bodies such as the European Commission, reflects growing concern among international law enforcement agencies that cryptocurrencies are being used to launder the proceeds of crime.

Potential of bitcoin 

Crypto currencies are becoming increasingly popular in Nigeria where bank charges are high. On Tuesday 17 September, the Central Bank of Nigeria introduced a 2 percent charge on cash deposits over 500,000 Naira (€1250) in several states, and 3 percent on withdrawals of the same amount.

Although these charges are aimed making Nigeria a cashless society, they are also pushing people to find other ways to transfer money digitally. Mali Chung travels around Nigeria giving free workshops about the potential of bitcoin and other crypto currencies.

"People are especially interested in learning about international transfers to avoid bank fees," Mali Chung has observed. "People in the Diaspora use it to send money home, and people here also transfer bitcoin to relatives abroad."

The Central Bank of Nigeria has yet to regulate crypto currency transactions. Mali Chung's benevolent act has sparked a debate about the potentially positive and the negative use of crypto currencies in a country with an ominous reputation for online fraud and political corruption.

By Rosie Collyer 

RFI

Crypto currency traders in Nigeria accuse Paxful of fraud

Cryptocurrency exchange Paxful is in hot water in Nigeria after crypto traders in the country claimed the firm has been closing down their accounts illegally, causing them to lost tens of millions of dollars.

The traders have filed the petition with Nigeria’s Economic and Financial Crimes Commission (EFCC), accusing Paxful of robbery, fraud, and breaching its terms and conditions. The EFCC is the country’s financial services law enforcement agency. According to a report by local outlet Punch Nigeria, the traders were joined on the petition by United Global Resolve for Peace, a non-governmental organization.

The petition claims that Paxful falsely accused Nigerian traders of being involved in fraudulent activities. It then allegedly used this excuse to close down thousands of accounts belonging to Nigerian traders. Traders who owned cryptos when their accounts were closed lost those cryptos.

Part of the petition stated:

“A few days ago, our organization was approached by some Nigerians who complained bitterly that Paxful Incorporated, the company that owns the online cryptocurrency trading and exchange platform, ‘https://paxful.com’ has been ripping them of their life investment in cryptocurrency by suspending their accounts, deactivating their wallets and refusing to return the value in their accounts to them even after investigation and finding that they were not involved in any fraudulent activities.”

The petition also gave some background on the immense success that the Estonia-based Paxful has had with Nigerian users. In 2018, the exchange made $20 million in profits from its operations worldwide. But it was Nigeria that contributed the bulk of this profit, making up over 40% of the total.

The petition further revealed how Paxful has used the opportunity to rob Nigerian traders. It stated:

“The respondent has, through willful disregard for contract and rules of commercial transaction, done a lot to rob Nigerians of their hard-earned money by its unrestrained activities of blocking their accounts and stating that investigation will be conducted. At the end of the investigation, the respondent always comes out to say the vendor has done nothing wrong and thereafter release their accounts without the funds in it.”

The report by Punch Nigeria also quoted some of the traders whose accounts have been drained under the guise of investigations. One of them is Samuel Olanrewaju, a trader who lost over 21 million Nigerian naira ($60,000) to the scam. Olanrewaju alleges that Paxful confiscated his Bitcoin Core (BTC) stash in November 2018. Paxful accused him of having a false online profile, a charge he still insists he is innocent of. Olanrewaju claimed Paxful is stereotyping all Nigerians as scammers. He told the news outlet, “We have about three million Nigerians trading on Paxful platform and they accounted for 40 per cent of its revenue. Despite this, the leadership of the firm was always referring to Nigerians as scammers.”

Paxful responded to the accusations in an email, denying any wrongdoing. According to the company, only accounts found to be engaging in fraud were suspended. Part of the statement said, “All accounts that have been shut down have a reason for it. We will not shut down any account unless they violate our TOS (Terms of Service).”

Note: Tokens on the Bitcoin Core (SegWit) chain are referenced as BTC coins; tokens on the Bitcoin Cash ABC chain are referenced as BCH, BCH-ABC or BAB coins.

Bitcoin Satoshi Vision (BSV) is today the only Bitcoin project that follows the original Satoshi Nakamoto whitepaper, and that follows the original Satoshi protocol and design. BSV is the only public blockchain that maintains the original vision for Bitcoin and will massively scale to become the world’s new money and enterprise blockchain.

COINGEEK

Cryptocurrency could help light up Nigeria

Imagine being able to purchase clean energy cheaply and through cryptocurrency. Sounds futuristic? But it's a possibility that OneWattSolar, a startup based in Lagos wants to achieve.

The clean energy outfit has come up with a way of allowing thousands of Africans to pay for solar energy using blockchain tokens without having to pay for the solar system infrastructure, which is funded through financial backers. 

It was a concept Victor Alagbe, the company's vice president of operations and blockchain strategy, had been thinking on when reading about Elon Musk. 

"I did some writing on Tesla and so I thought it is sunny most of the time here, especially in the northern parts where it is quite arid," recalled Alagbe who is a former business writer.

"So why don't we use this to power our own electricity... many Nigerians cannot really afford to set up their own solar systems. 

"They can't afford the start up cost so most people would rather go for generators which is not economical when you think of maintenance costs," Alagbe said.

The idea behind blockchain payments

The aim is for customers to purchase tokens in the local naira currency using the platforms of third party tech finance companies. 

"It provides transparency, you can see the utilization of funds, how many systems we have purchased and how many are being used."

The tokens used have been built on the blockchain platform, Ethereum. 

On a traditional service using fossil fuels, energy usage is around 70 Nigerian naira ($0.19) per kilowatt. "But the blockchain system is 50 percent cheaper than diesel," claims Alagbe because the expensive maintenance costs of generators is mitigated.

Instead OneWattSolar's systems will include solar panels and a fitted internet enabled router that will automatically collect data on energy usage that is charged monthly on a pay as you go basis.

"This will ensure that customers are billed for exactly what they use," said Alagbe.

It is also hoped it will alert OneWattSolar to any potential problems with the systems in real-time.
Although the startup has only been eight months in the making, it's part of GoSolar Africa, a renewable energy company that's been operating in Africa since 2010. The plan is to launch in January 2019 with an initial 1,000 systems that are fully operational the company said. 

Around 41 percent of Nigerians have no access to electricity, according to the World Bank and it is these potential customers the startup is looking to connect. 

"So far there are 6,400 homes who have signed up to be put on our waiting list," said Alagbe.
According to him, the long term goal is to connect one million homes across Sub-Saharan Africa without electricity with solar energy through blockchain. It's hoping to achieve this by 2025.

Africa's renewable energy industry

The young tech company is part of a boom in the renewable energy industry across Africa.
A joint venture between Abuja based Motir Services Nigeria and US based DuSable Capital Management will power 180, 000 homes in Nigeria in a 100MW solar project worth $175m. 

In Morocco - the world's largest concentrated solar power plant called the Noor-Ouarzazate complex - will power more than one million homes when complete later this year. 

It is hoped the complex will decrease Morocco's dependence on oil by about 2.5 million tons per year and reduce carbon emissions by 760,000 tons per year in the country, according to the World Bank who has financed the project's construction.

Ghana is also gearing up its renewable energy capabilities. 

Earlier this year, the West African nation announced a goal of increasing renewable energy consumption from currently one percent to 10 percent of energy usage by 2030. 

While in October, Vice President Mahamudu Bawumia also announced that all government institutions would run on solar power to reduce energy consumption costs.

As African nations move towards cleaner and reliable energy, startups like OneWattSolar could prove profitable.

CNN

Bitcoin used in Nigeria to hedge against national currency

The scrappy citizens of Lagos, Nigeria are traders and can-do survivors almost by nature. Their government, however, has mismanaged the nation’s money to such a degree that it’s prone to wild devaluation swings. And while an argument could be made bitcoin too is volatile, it actually isn’t comparatively. With access to peer-to-peer exchanges such as Localbitcoins, Nigerians are revolutionizing even their traditional outdoor marketplaces, providing a financial oasis in rather dark times.

“I can use Bitcoin for anything now […],” Soji, a Lagos web designer told Jeremy Kirshbaum and Pelumi Oguntemehin. “It means I can invest and also pay anybody currently, except old people, I will send them bitcoin. But some people think it is a scam to deal in Bitcoin and they also fear being hacked, as many people do not know how to protect themselves online.” Bitcoin is a handy way for Soji to gain overseas hosting services from vendors who simply won’t accept his country’s native fiat currency, Naira.

Bitcoin gets considerable flack in professional financial circles for its legendary volatility. Wild price swings can for sure occur, and have. However it is no match for Nigeria’s Naira. As Longhash explains, “Silas Okwoche is a self-taught engineer […]. He was the co-founder of a cell phone company called Nerve Mobile, which used Android smart phones from Shenzhen, China. Silas found a Chinese partner via the e-commerce platform Alibaba. Nerve Mobile’s venture was profitable for a time, but ended for a reason that had nothing to do with Silas’s product. The Nigerian Naira fell against the Chinese yuan by over 15%, and the hardware became too expensive. Silas’s story is not exceptional: Nigerian business people struggle with currency volatility every day,” the reporters insist.

Nigeria rests on the African continent at its Western curve, hugging the Gulf of Guinea, a click North of the Equator. It’s bordered by four countries to its immediate East, as a kind of horseshoe with only the South Atlantic opening West. Lagos is the largest city in Nigeria, while also boasting being the highest concentrated city in Africa. It is one of the fastest growing cities in the world, according to many estimates. It routinely ranks as the highest in African GDP, acting as a financial center and bustling port. A rather wonderful examination of Lagos can be found in Robert Neuwirth’s presentation, “The power of the informal economy,” though admittedly a bit dated.

Present day sees the broader country as lagging behind even India in extreme poverty, as CNN reports, “Nigeria has overtaken India as the country with the largest number of people living in extreme poverty, with an estimated 87 million Nigerians, or around half of the country’s population, thought to be living on less than $1.90 a day […] In Nigeria, as with other countries on the continent, that figure is projected to rise. ‘By the end of 2018 in Africa as a whole, there will probably be about 3.2 million more people living in extreme poverty than there are today,’” according to researchers. All this, and with being the largest oil producer in Africa.

Crypto as an Oasis in Extreme Poverty, Sectarian Violence

As of this writing, central Nigeria has descended into sectarian violence. Reports are sketchy, but most outlets reveal scores of people have been killed as ethnic and religious tensions rise. Fifty houses have been destroyed, if local police are to be believed. And these tensions have been brewing at least since 2013 between herdsmen and farmers.

Lagos, then, becomes a beacon of hope in a sea of economic and sectarian devastation. The settling of bitcoin in terms of price, the sideways action of recent weeks, has ironically allowed more businesspeople of Lagos to onramp into crypto. It’s also tamped down scams. “Currently, most Ponzi scheme traders are out of the market as they were only there for profit only, now that Bitcoin is stable and the profit margin is small, we will witness a gradual growth and diverse application of blockchain tech solutions,” Toyosi, investor and crypto trader, told Longhash.

Jeremy Kirshbaum and Pelumi Oguntemehin note “it is hard for a cryptocurrency to act as both a speculative asset and a currency. Countries like Nigeria that suffer from high volatility or institutional uncertainty actually need Bitcoin to act as a medium of exchange.” Traders such as Toyosi turn to remittance tokens such as Sure Remit, hoping to reduce overall costs. “Sure Remit,” they explain, “uses a cryptographic token as an alternative for sending money home from abroad. When people are using cryptocurrency for normal transactions and the value is more stable, Sure Remit can provide a more useful service.”

The key is contending with its fiat currency, Naira. Its flash devaluations add “another layer of uncertainty to businesses that purchase goods or components from abroad. That’s why Nigeria presents the perfect use case for cryptocurrencies like Bitcoin,” Longhash stresses. Another tech businessman, Temo, “works on hardware ventures and he buys his components from China. When he does this, the most convenient option is to purchase Bitcoins on Localbitcoins.com or another peer-to-peer marketplace using Naira, and then sell them for Chinese yuan. It is much faster than using normal channels, and costs a fraction of the price. If he uses a normal bank transfer, he will be charged huge fees by both the sending bank in Nigeria and the receiving bank in China. Also, it can take up to a week for the wire transfer to move the money.”

Bitcoin.com

Nigeria may soon have first blockchain technology incubator

Peer-to-peer cryptocurrency trading platform, Paxful, just recently announced a major expansion into Africa.

Because of that, it would be launching a blockchain incubator in Lagos, Nigeria to help streamline operations.

According to Bitsonline, the incubator is scheduled to launch in the fourth quarter of 2018 and Chuta Chimezie has reportedly been appointed to lead the hub and spearhead regional operations in Africa.

Part of the reasons the company chose Nigeria to build this incubator is its demographics. According to a press release, Nigeria commands the highest number of Paxful users in Africa.

So it says a lot that this incubator will likely come as the first of its kind in Nigeria — or even Africa perhaps — when it finally debuts.

Globally, cryptocurrency has been facing intense crackdown as regulators are increasingly raising alarms concerning its volatility in the market.

Using the incubator to grow an army of platforms trading in crytocurrency will be appealing to Paxful. But that may simply raise eyebrows; especially with the whole regulations on cryptocurrency.

Perhaps, it plan to use the incubator in powering other blockchain technologies outside of crytocurrency.

Chimezie emphasises that the incubator is simply a starting point to help driven entrepreneurs in an industry that has shattered boundaries all over the world, and that Paxful initiatives have provided help to those in great need here.

Whichever way this turn out, it will make for an interesting watch.

Techpoint

Cryptocurrency craze unfazed in Nigeria despite bitcoin plung

While bitcoin and other cryptocurrencies have suffered precipitous falls in recent weeks, the units remain popular in Nigeria where they make it easier to do business.

On the surface, digital coins may not seem like a good idea in a country where corruption is rampant and stacks of hard cash are often smuggled overseas.

Yet West Africa's biggest economy has the world's third-largest bitcoin holdings as a percentage of gross domestic (GDP), behind Russia and New Zealand, according to Citigroup.

That may be because blockchain technology -- public, online ledgers that underpin cryptocurrencies -- is liberating Nigerians sidelined by the global financial system as it dramatically improves the ease of doing business.

Olaoluwa Samuel-Biyi, a slight 27-year-old entrepreneur, looks the part of an aspiring corporate disrupter, dressed in skinny jeans with dishevelled hair.

He first considered using cryptocurrency when credit card firms and other established payment providers refused to partner with his global remittance company, deeming the venture too risky.

"They said the markets were too high risk and that people could finance terrorism," he told AFP, laughing. "It's ridiculous."

He realised that the only way he could solve the problem was to use cryptocurrency.

"It's so hard to send money from Nigeria to Zimbabwe, or from the United States to Sudan," he explained. Banks were "very tedious" and payment companies "generally exploitative", he said.

"There's heavy discrimination, definitely. We have to go all around them to succeed."

- 'Financial inclusion' -

Samuel-Biyi's company, SureRemit, developed its own virtual token -- a kind of custom cryptocurrency like bitcoin or one of the many alternatives such as ether.

The tokens are used to buy vouchers, which may be used to purchase goods and pay bills at participating merchants anywhere in the world, cutting out cumbersome middlemen and eliminating fees.

In January, SureRemit held its "initial coin offering" (ICO), a form of online crowdfunding where people purchase the tokens to be put in circulation for use in eight countries, mostly in Africa and the Middle East.

The 500 million tokens, each worth two US cents, sold out in just two days and were snapped up by major cryptocurrency players, including South Korea's Hashed, raising $7 million for the company.

"We were expecting scam allegations," said Samuel-Biyi, referring to Nigeria's unenviable reputation for online financial fraud. "But the world really accepted it."

If the token system works, SureRemit stands to take a chunk of the world's remittance market, which was worth $429 billion in 2016, according to the World Bank.

It's hardly surprising that SureRemit was conceived in Nigeria: remittance flows that year were worth $19 billion -- more than four percent of GDP.

Sub-Saharan Africa has some of the highest remittance costs in the world, with the most expensive fees seen within the continent.

To send money from France to Mali incurs a five percent fee, a quarter of how much it costs to send from Nigeria to Mali.

Such high fees have for years forced Nigerians to find alternative, sometimes risky, ways to transfer money.

"I remember back in 2004, e-gold (a defunct digital currency) was the only option anyone in Nigeria had to make online payments," said Tim Akinbo, the founder of Tanjalo, a Nigerian exchange where people can buy bitcoin with the local naira currency.

"There are still African countries cut off from international commerce online. Bitcoin is technology that allows financial inclusion."

- Naira volatility -

The depreciation of the naira, which has sunk to 305 against the US dollar from 169 in 2015, has made cryptocurrencies even more attractive -- and the authorities are paying attention.

Nigeria's central bank governor Godwin Emefiele warned recently that "cryptocurrency or bitcoin is like a gamble", though the Senate has launched an investigation into "the viability of bitcoin as a form of investment".

Stern warnings haven't made an impact on trading, said Owenizi Odia, Nigeria spokesman for Luno, another cryptocurrency exchange operating in the country.

"I think there's an acknowledgement that this technology is the future, going beyond bricks and mortar to improve cost efficiency," added Muyiwa Oni, an analyst at Stanbic IBTC Holdings in Lagos.

"For now we're still trying to distinguish who the main players will be."

Samuel-Biyi hopes to be one of them.

"Whether or not the authorities call it gambling, Nigerians are just looking for any opportunity to get ahead of the curve," he said. "It's part of the hustle."

Sowetan

Nigerians beating bitcoin scams

Depending on your feelings about Bitcoin, it may seem appropriate that Nigeria’s love for the cryptocurrency began with a scam. Mavrodi Mondial Moneybox (MMM), a 30-year-long global Ponzi scheme that began in Russia, roped in millions of Nigerians from late 2015 to the end of 2016 with promises of 30 percent returns in as little as 30 days. When the government began to crack down on bank accounts linked to the scheme, MMM’s operators cut the banks out and started requiring victims to use Bitcoin. By the time MMM suspended its payouts, shortly before Christmas 2016, it had robbed an estimated 3 million people in Nigeria—where the per capita annual income is less than $3,000—of $50 million.

It had also convinced many of them that, the scam notwithstanding, Bitcoin was the future. “It was MMM that made Nigerians understand how Bitcoin worked,” says Lucky Uwakwe, co-founder of Blockchain Solutions Ltd., a cryptocurrency consulting firm in Lagos. Today, Nigerians are trading about $4.7 million in Bitcoin a week, Uwakwe says, up from about $300,000 per week a year ago. That’s No. 23 globally, according to researcher CryptoCompare—far below the more than $1 billion traded daily in U.S. dollars or Japanese yen, but comparable to the volume of activity in Chinese yuan or Indian rupees. “The growth has been crazy,” says David Ajala, who runs NairaEx, one of about a dozen digital currency exchanges in Nigeria. “It took us two years to get 10,000 customers. Within the last year, we’ve added 90,000.”

The scams have kept pace. Phony traders have flooded Nigeria’s cryptocurrency exchanges, messaging apps, and even the streets of Lagos and other cities, promising people fast money and disappearing once they’ve taken theirs. “A lot of people have had their fingers burned,” says Adeolu Fadele, founder of the Cryptographic Development Initiative of Nigeria, a group that aims to educate regulators and the public about digital currency.

The scams follow a pattern familiar to anyone who’s ever received a message from a supposedly beleaguered Nigerian prince: The target is asked to wire over naira, the local currency, in exchange for Bitcoin. In some cases the scammer uses the name and photo of a real dealer and creates a trading profile on a local exchange that’s good enough to pass a cursory background check, a technique known as cloning. Others will make an offer not of Bitcoin, but of “billion coin” or some other nonexistent cryptocurrency. “Everybody I know has been scammed in one way or another,” says Bashir Aminu, a digital-security expert and Bitcoin enthusiast in Lagos.

So Nigeria, unlike other Bitcoin hubs, has begun to develop informal groups of traders who take an old-school approach to verifying transactions. After several friends of Aminu’s lost thousands of dollars to scammers between them, they set up an informal exchange on the messaging app Telegram, trading among themselves. When other friends sought to join the group, Aminu would review their identification and banking documents—comparing passports and papers with the faces in front of him. Sometimes he’d even act as a trusted broker, holding a buyer’s money in escrow until the seller came through with the Bitcoin transfer. Over the past year, he says, his group has grown to almost 800 members. There are dozens of similar networks, Aminu says, with varying degrees of security procedures. Some arrange face-to-face meetings in homes, the backs of small shops, and other private places, where a buyer hands over hard cash and watches the seller make the Bitcoin transfer on a smartphone.

This sort of facilitator is essentially a digital aboki, the kind of black-market money-changer who lurks outside high-end Nigerian hotels to swap plastic sacks full of weather-beaten naira for stacks of $100 bills and euros. As these informal Bitcoin-centric networks grow and multiply, Aminu says, they’re increasingly populated by people who trade digital currency as a full-time occupation. Because of all this informal trading, the size of Nigeria’s market is probably much bigger than what the public exchanges report, says Uwakwe, the consultant.

Aminu says the occasional scammer still sneaks into his Telegram network, and he recently booted more than 100 people he deemed untrustworthy. For many, the potential profit is too good to pass up, says “Ambassador” Smart Oluwadola, a cryptocurrency peddler in Kano, a desert city in the north. In August a friend persuaded Oluwadola to ditch a job hawking health supplements for a suspiciously pyramidal Philippine “business club” and buy a couple hundred dollars’ worth of Bitcoin. Now he’s an evangelist, with thousands of dollars’ worth, a local radio ad urging others to buy Bitcoin, and a series of investing seminars at a local hotel. “If you don’t take a risk, you can’t get anything,” he says. “And if it’s going to be the future of currency, then you better start now.”

Bloomberg

Related story: Bitcoin blooming in Nigeria

Bitcoin blooming in Nigeria

In July 2016, Manasseh Egedegbe, an Abuja-based investment manager, was caught in the cross hairs of Nigeria’s dollar crunch and had some difficulties making an international payment. At the time, with Nigeria’s foreign reserves and revenues shrinking amid an economic slump, the Central Bank of Nigeria (CBN) put up currency controls to restrict access to dollars. For Egedegbe, and many other Nigerians, that presented a problem. In his desperation, he turned to the cryptocurrency wave of the moment: bitcoin.

“I was able to use bitcoin to do just one transaction and then I got hooked,” Egedegbe tells Quartz.

Over the past 18 months, due to reasons ranging from needing to make international payments, like Egedegbe, or simply wanting a slice of the next big thing, bitcoin adoption in Nigeria has spiked. This year, peer-to-peer bitcoin trading in Nigeria has increased by nearly 1,500%—surpassed only by China. Data from LocalBitcoin, a popular bitcoin exchange available in around 200 countries, shows weekly bitcoin trade volume in Nigeria crossed 1 billion naira ($2 million) in August. “Seeing the price skyrocket” has drawn a lot of Nigerians “who want a piece of the action,” Egedegbe says.

The situation in Nigeria is not too dissimilar from Zimbabwe, whose unstable economy and depleted foreign exchange markets saw locals turn to bitcoin as a storage of value this year. At one point Zimbabwe had the highest bitcoin prices in the world.

A new crop of local bitcoin exchanges are proving central to the growing local adoption. Timi Ajiboye co-founded Bitkoin Africa in October after experiencing some difficulty trying to buy the cryptocurrency on foreign exchanges. The inability to pay with a Nigerian bank account or card drove Ajiboye’s decision to start Bitkoin Africa to make it much easier for local trading.

For his part, Tim Akinbo, co-founder of Tanjalo, also an exchange founded in October, says the potential local applications of cryptocurrencies and the enabling technology was the motivation for starting the exchange. There are also some older players in the space like NairaEX, a bitcoin exchange founded in Nov. 2015.

Despite growing adoption, skepticism largely outweighs enthusiasm but Ajiboye says local exchanges can help ensure more people understand cryptocurrencies better. An initial skeptic himself, Ajiboye cites his new-found conviction in cryptocurrencies, after gaining more understanding of their potential, as hope for a broader change in mindset.

Much like how local fintech companies are creating products and services to plug gaps in the local financial system, cryptocurrency technology has some potential across Africa given the lack of “advanced financial infrastructure,” Akinbo says. In that respect, these exchanges serve as vital cogs in the evolving infrastructure that will see cryptocurrencies achieve some of its potential in Africa. Whatever that potential is, the first step is “allowing people to buy and own the currencies,” Ajiboye says.

Both exchanges are notching up transactions in just two months of being in business. Bitkoin Africa’s trade volume is rapidly increasing: nearly half of its total trade volume since inception happened in the first ten days of December. Meanwhile, Tanjalo has done close to $1 million in trade volume with “very little marketing,” according to Akinbo.

Dodgy beginnings

The origins of mainstream interest in bitcoin across many African markets has been credited to Mavrodi Mundial Moneybox (MMM), a two-decade old Russian ponzi scheme. At its peak, MMM had over two million users in Nigeria despite several warnings by authorities. It has also been operational in Ghana, Zimbabwe, Kenya and South Africa in the past 18 months.

The scheme’s playbook was simple: users could “invest” money by pledging to other users in the scheme and then receive returns plus 30% interest in 30 days. But its long run in Nigeria came to a halt when, in Dec. 2016, it suspended operations (CBN estimates that MMM users lost $50 million when the scheme crashed). But, at the start of the year, when MMM sought to relaunch, it tried to get round regulator’s rules by allowing users pay and receive pledges using bitcoin—a strategy it has also deployed in other parts of Africa. Many participants of the scheme, looking to make a quick buck, were quick to latch on yet again.

Over time, renewed interest has come from wealthier, middle-class Nigerians who, Egedegbe says, “likely understand the technology better than the average man in the street.” But even though it’s not a Russian ponzi scheme, a sharp drop in bitcoin’s prices could still see people get their fingers burned. Its manic price surge—it has broken through $1,000 thresholds within hours in December—has seen it questioned as possibly the most obvious bubble ever and has also drawn comparisons with the dot-com bubble at the turn of the millennium.

Akinbo, who is more upbeat about bitcoin’s future, says its potential to facilitate cross border trade may eventually justify the increasing price spike. “When you look at it in terms of that potential alone, I’d say it’s undervalued.” As for a potential bubble, Akinbo views this phase more as a time when everyone is trying to get in on the action. “Just like any new technology, speculation is how this will find its footing,” he says.

 

The big picture

Much of the bitcoin craze is down to big-ticket predictions about its future potential. In Africa, possibilities discussed range from easing payments, particularly for international services to enhancing remittances—a boon for many local economies. But the most basic of these, Akinbo says, is the possibility of having a system “where everyone is permitted to participate” without discrimination of geographical location or origin.

For Ajiboye, who plans to expand Bitkoin Africa into other African countries from next year, making it easier to trade across Africa is a real possibility. “It’s easier to send money from America to Nigeria than to send money from Nigeria to Gambia but the technology can power these things,” he says.
 

Death by regulation

Whether or not the bitcoin bubble bursts, its potential locally could be mitigated by regulation. While it’s difficult for authorities to regulate cryptocurrencies which they have little control over, it’s possible to regulate companies that provide services using the currencies. So far, Nigeria’s Central Bank (CBN), like most apex banks across the world, has issued warnings on the risk of cryptocurrencies. One of the earliest came in a January circular in which it cited the dangers of “money laundering and financing of terrorism.”

However, more recently, the apex bank’s stance appears to have softened: in October, it reportedly set up departments to develop a report on policy proposals for cryptocurrencies. Quartz’s email inquiries to ascertain the progress and submission date for the report have not yet been replied.

As CBN mulls its policies on cryptocurrencies, Akinbo advocates that it “remains flexible” by continually reviewing and tweaking its policies in line with global trends. The alternative is adopting and sticking to a policy which could become archaic in a quick changing world. One event that could trigger a wave of apprehensive regulation could be a sharp dip in prices (or the bitcoin bubble bursting). If that’s the case, Osarumen Osamuyi, a Lagos-based developer, hopes the apex bank doesn’t adopt “draconian regulation.” Such drastic action, he says, “will ultimately hurt innovation.”

Quartz

Nigerians warned about investing in bitcoins

Nigeria Deposit Insurance Corporation (NDIC) ​has​ warned ​Nigerians ​against ​investing in digital currencies, especially Bitcoins​.

It stated that such currencies were yet to be approved by Nigerian regulators.

Chief Executive Officer, NDIC, Alhaji Umaru Ibrahim ​spoke on Thursday at the ongoing Lagos International Trade Fair.

Represented by the Director, Claims Resolution, Mr. A.S Bello, ​the CEO said: “The protection of the depositor remains our top priority.​

“​That is why we continue to stress the need for depositors to patronise only financial institutions that are licensed by the CBN and which display the NDIC Sticker with the words ‘insured by NDIC’ in their banking halls or entrances.

“It is for this reason that I must sound a word of warning against patronising dubious fund managers, otherwise known as “Wonder Banks”. They persuade their unsuspecting victims to part with their hard earned money with promises of interest rates that are unrealistically high as the returns on their investments.

“The result is the loss of vital savings and sometimes disastrous consequences to the lives of the victims.

​”​Also, the emerging trend of investing in digital currencies popularly known as Bitcoins is equally dangerous because just like the “Wonder Banks’, the digital currencies are not licensed by the CBN and are therefore not insured by the NDIC.”

​Ibrahim ​disclosed that the corporation had paid over N100 billion to depositors of liquidated banks​, adding that the payments​ were announced​ ​via newspapers, radio and television​.
​
“We implore those depositors who have not responded to our calls to come forward to collect their insured deposits and liquidation dividends already declared for uninsured deposits,”
​he​ added.

Daily Post

P2P Bitcoin exchange in Nigeria offers services to all African countries

The Nigerian person-to-person (P2P) bitcoin exchange, Bitkoin.Africa, launched on October 1st. The exchange currently only provides Nigerian users with full functionality, but claims to allow customers from “all other countries” to buy bitcoins.

Nigeria has become host to a P2P bitcoin exchange seeking to facilitate greater access to bitcoin throughout the African region. Bitkoin.Africa has been launched by a team of Nigerian developers including Timi Ajiboye.

The platform currently only allows Nigerian users to post listings to sell bitcoins, however, offers listings to buy to customers from “all other countries.” The exchange provides wallet and escrow services, and facilitates a range of payment methods via Paystack. According to Techmoran, Ajiboye stated that “each Bitkoin Africa account comes with a bitcoin wallet that enables users store, receive and send bitcoin. Bitkoin Africa transactions are carried out online and are facilitated by users’ Nigerian bank accounts or Naira debit cards.”

Timi Ajiboye announced the launch of Bitkoin.Africa via twitter, posting that he and his team had “been working hard on something for the past four months; a bitcoin exchange for Africa.” Ajiboye garnered international attention in 2016 for his and his partner’s involvement in the development of Muslimcondemn – a website which hosts “a collection of all the cases where Muslims have condemned wrongdoings done falsely in the name of Islam” in an attempt to provide a greater public platform for the sentiments of Islamic moderates.

Bitkoin.Africa enters a relatively crowded market of companies providing exchange services to the Nigerian bitcoin community, with Luno, Remitano, and NairaEX already competing for the loyalty of local cryptocurrency users. Shopnow.ng, an e-commerce website claiming to be the first of its kind in Nigeria to solely accept bitcoin as a means of payment, opened its doors in recent months – suggesting that cryptocurrency demand and adoption is growing locally.

Shopnow is reported to have stated that “bitcoin is becoming more popular in Nigeria and today the country has the highest volume of Bitcoin transactions in Africa and according to google trends, Nigeria is the country that searches the word “Bitcoin” the most on google.com in the whole world.” P2P bitcoin trading on localbitcoins has shown a steady rise in volume since November 2016. Weekly trading volume has oscillated between the 900,000,000 – 1,100,000,000 Nigerian Naira area in recent weeks, excluding the sudden spike that established the current all-time high of approximately 1,866,600,000 during the week of the fifth of August.

The increased entrance of Nigerian investors into the cryptocurrency markets has not gone unnoticed by the country’s Central Bank. Last month, the Deputy Director of the Central Bank of Nigeria (CBN), Musa Jimoh, stated that the apex bank “cannot stop the tide of waves generated by the blockchain technology and its derivatives”, during a recent conference in Lagos. Speaking at the same conference, David Isiawe, President of the Information Security Society of Nigeria, stated “the reality… is that the distributed ledger technology, blockchain and cryptocurrency are facts that we must face, whether we like it or not. We cannot wish this reality away.”

Bitcoin.com

Related story: Nigeria will lead in Bitcoin adoption in Africa

Video - Nigeria's central bank cautions financial lenders against Bitcoin

Nigeria's central bank is rallying commercial lenders against virtual markets to fight money laundering and terror financing.

Virtual or digital currency is just emerging in Nigeria. But it's feared to be gaining traction on the back of Nigeria's troubled foreign exchange markets.