Crypto will ‘come to life’ in Nigeria, central bank governor says

Emefiele said the Nigerian government will do its best to prevent crypto from being used to finance illicit activities.

At a 279th meeting of the Monetary Policy Committee in Abuja, Central Bank of Nigeria Governor Godwin Emefiele expressed confidence that cryptocurrencies like Bitcoin (BTC) will be legal in the country, Business Insider reports Wednesday.

Emefiele did not directly mention a decision to reverse the CBN’s February ban of institutions from buying and selling crypto, but noted that the bank has been investigating the industry:

“We are committed in the CBN, and I can assure everybody that digital currency will come to life even in Nigeria [...] Under cryptocurrency and Bitcoin, Nigeria comes 2nd, while on the global side of the economy, Nigeria comes 27th. We are still conducting our investigation, and we will make our data available.”

Emefiele also said the Nigerian government will do its best to prevent crypto from being used to finance illicit activities. “We found out that a substantial percentage of our people are getting involved in cryptocurrency, which is not the best. Don’t get me wrong, some may be legitimate, but most are illegitimate,” he said.

The banker also expressed concerns over the crypto market crash in mid-May, which has been largely attributed to Tesla CEO Elon Musk’s decision to suspend Bitcoin payments for cars and his further BTC criticism:

“We saw the market collapse. Initially, when Elon Musk tweeted around the time when we said our banking and payment facilities are no longer available for cryptocurrency transactions, and he tweeted that he will invest $1.5 billion, and the price went up. He now tweeted and raised a few concerns, and the thing plunged.”

The CBN did not immediately respond to Cointelegraph’s request for comment.

As previously reported, Nigeria has emerged as the biggest source of Bitcoin trading volume in Africa as of August 2020, also becoming one of the fastest-growing crypto markets in the world. According to data from Bitcoin P2P marketplace Paxful, Nigeria ranked second only to the United States in trading volume as of December 2020.

Amid the growing adoption of Bitcoin, Nigeria’s national currency, the naira, has been falling. “Bitcoin has made our currency almost useless or valueless,” Senator Sani Musa of the Niger East Senatorial District said in February. Following Emefiele’s latest remarks, the naira dropped 1.2% to near a three-and-half year low on the black market on Thursday.

By Helen Partz

Coin Telegraph

Nigeria is quietly rewriting fintech’s rulebook

It all started with a tweet on New Year’s Day, 2016. Joshua Chibueze, a computer scientist and entrepreneur based in Lagos, Nigeria, floated the idea of digitising the kolo, a wooden box similar to a piggy bank, used in many Nigerian homes to save money.

Chibueze had heard that, with enough persistence, people could set aside significant sums, but when he started using a kolo himself he realised how easy it was for upwardly mobile young Nigerians like him to forget – or simply lack the discipline – to save every single day. Worse: as Nigeria’s economy was getting increasingly cashless, an old box did not sound like an effective saving device – and was a security liability.

Hence the idea of a digital kolo. Odunayo Eweniyi, a fellow entrepreneur (and Twitter friend of Chibueze’s), was the first to reply to his tweet on the subject. “The conversation progressed from digitising to automating the kolo,” Eweniyi recalls. The pair teamed up and – alongside a third co-founder, Somto Ifezue – built an online savings platform to help medium-to-low-earning Nigerians save small amounts daily, weekly, monthly, or annually. Launched as PiggyBank.ng in February 2016, today it is known as PiggyVest.

Marketing solely on social media for the first couple of years, PiggyVest was able to help Nigerians sign up easily using their smartphones, automate savings and earn interest, with rates between six and ten per cent. By the end of 2018, PiggyVest had helped over 53,000 users save close to a billion Nigerian naira (£2,000,000).

In 2015, two per cent of Nigerians controlled 90 per cent of banks’ total deposits, according to the Nigeria Deposit Insurance Corporation, a government-backed financial agency. One year later, Nigerian financial inclusion advocacy group EFInA found that only 36.9 million adult Nigerians – out of a population of over 195 million – had access to a bank account. Nigeria was grappling with a huge unbanked population and PiggyVest set to cater to this demographic blending technology and traditional saving methods.

“The thing about the unbanked is that they’re actually banked, they’re just not formally banked,” says Eweniyi. “Banking is necessary to them but the banks themselves haven’t proven to be.” She believes that Nigeria’s financial exclusion problem will be solved by working with people rather than offering top-down solutions.

That is why Piggy`vest has decided to borrow well-tested models from Africa’s financial history: after its debut as a digital kolo, in May 2018 the company launched a new feature – called Smart Target – modelled af

ter the traditional saving practice of ajo. First recorded in the 19th century, but rumoured to have been around for longer among the Yoruba ethnic group, an ajo consists of a group of colleagues, friends, or religious peers, each contributing the same amount of money at an agreed frequency to hit a financial target. At the end of each savings cycle – typically, a month – one member of the group receives the entire saving pot; the ajo goes on until everyone has received their payout.

“My mum belonged to at least four ajo groups, one of which was at the university where she was a lecturer,” says Eweniyi, whose parents were both academics. “My parents relied on ajo to pay their way through our education and this is how most middle-class families I know survived.”

PiggyVest’s take on ajo, however, tweaks the tradition to fit the times: Smart Target lets people save towards a common goal together as an online community, but unlike ajo, users are in control of how much they contribute and where the payout goes.

PiggyVest is just one of a new breed of Nigerian fintech companies. “Companies like PiggyVest have moved to push savings and budgeting consciousness, by gamifying the process and including a reward system for users who follow through,” says Modupe Odele, a lawyer and startup consultant based in Washington, DC. She predicts that in the near future, Nigeria’s fintech industry will start broadening its scope.

“We have payments, we have savings and these are great, but there's still a lot of financial technology that is ripe for exploration,” Odele says. 

By Kiki Mordi

Wired

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Video - Nigeria's booming investment in cryptocurrency continues despite ban

 

Global cryptocurrency trading platform Paxful recently announced that Nigeria had become the biggest market for bitcoin and cryptocurrency on its exchange despite the imposition of restrictions on trading in cryptocurrencies by the Central Bank of Nigeria. Kunle Lawal says he has made a fortune from the trade encouraging him to educate and train people in his community about how to go about it. He, however, cautions people to make informed decisions before getting involved in the trade, in addition to not committing all their money into one pot.

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The NFT Craze Is Helping Nigerian Artists Go Global

In March, Oyindamola Oyekemi Oyewumi, a 24-year-old Nigerian artist who creates portraits using ballpoint pens, tweeted her drawing of Ethereum co-founder Charles Hoskinson.

Hoskinson noticed the tweet and put it up for sale as a non-fungible token (NFT), or one-of-a-kind digital item with its own digital signature. By the end of the month, the tweet sold for $6,300 and now it’s Hoskinson’s Twitter profile picture.

“Luckily for me, Hoskinson himself told me about NFTs. He gave me a link to read about NFTs and, after reading about it, I decided I want to try it out,” Oyewumi told CoinDesk. Last week Oyewumi sold the first NFT she minted by herself on Mintable, and a friend helped her convert her crypto earnings to the local naira currency.

NFTs are all the rage this year, especially after the artist Beeple sold a digital art collage for $69.3 million through the British auction house Christie’s in March. Christie’s also announced Thursday it will be selling nine NFT collectibles known as CryptoPunks. This month, American-Senegalese R&B singer Akon launched AkoinNFT, an NFT platform to “supercharge and empower” artists and brands.

Now the trend has spread to Nigeria, where local financial institutions are banned from servicing crypto firms. This means Nigerians cannot convert digital assets to naira through traditional crypto exchanges. But that hasn’t wiped out crypto in Africa’s largest economy, thanks in part to its young and tech-savvy population. Users began switching to peer-to-peer platforms to avoid using banks and the use of crypto continues, as evidenced by how local artists like Oyewumi are embracing NFTs.

Although more Nigerian artists are entering the NFT space, they do so wary of the hype. Some Nigerian artists told CoinDesk that although minting their artwork comes with a number of advantages, they have concerns about the impact of NFTs on the art world in general.

Only good for already-established artists

Oyewumi feels the NFT culture is only beneficial to those artists who already have a large fanbase.

“If I put my art up as NFTs, sure, lots of people will see it. But some people will still prefer to purchase work from artists they already know. People might end up just creating pieces and uploading but not be able to sell anything,” Oyewumi said.

For instance, NFT art collector Michael Ugwu typically likes to check out an artist’s online presence and work before purchasing his or her art. A London-based music executive and entrepreneur of Nigerian descent, Ugwu owns around 40 NFT pieces by artists from around the world, including Nigeria. Ugwu told CoinDesk he only buys art he loves, but there is also a business perspective to consider.

“I also want to know that there’s going to be a global marketplace for that piece, if I want to sell it on the secondary market. It’s much easier to sell a Fewocious, a Billelis or if you get lucky and get your hands on a Beeple. So based on those factors, from African artists I primarily acquire work that I feel has a global audience,” Ugwu said.

He added that for some African artists, minting their first pieces could be a challenge due to the Ethereum gas fees sometimes needed to sell an NFT.

“It’s not cheap. A typical African artist may or may not have the $100 or $200 it’s going to cost them per piece. So that’s a small barrier,” Ugwu said, adding there are some platforms that waive or subsidize the minting fee.

Oyewumi feels new artists may also struggle with pricing their pieces and end up selling their art for less than what it’s worth.

All about the money

One NFT art piece in Ugwu’s collection is by the acclaimed Nigerian digital artist Osinachi.

Osinachi, 29, has made a name for himself as a digital artist and produces most of his work using Microsoft Word. When he first started making art in the late 2000s, his primary goal was to see his work displayed in a traditional art gallery. Over the years Osinachi reached out to numerous galleries but received no response.

Then he discovered crypto art.

In 2017, Osinachi learned people were posting artwork as NFT collectibles. With some help from the community, Osinachi minted a few of his works. In 2018, his art was featured in the Etherealblockchain summit in New York.

The following year Osinachi’s dream came true when he was invited to show his work at a contemporary art gallery in Switzerland. In 2020, his art was featured in CoinDesk’s “The Most Influential People in Crypto” list. The same year, he quit his job as an academic librarian at the University of Nigeria Nsukka to focus on his art full time. A month ago he sold one of his digital paintings, “Am I pretty?,” for 13.2 ETH (+5.85%) (around $27,600 as of Friday).

“A single NFT sale can translate to my one-year salary when I was working at the University of Nigeria,” Osinachi said.

Now, he is helping other Nigerian digital artists mint their work. Osinachi told CoinDesk that thanks to the NFT gold rush, digital artists like him are getting the attention they deserve and (thanks in part to the Beeple sale) learning that digital art can be priced as high as or higher than traditional art.

But he is also concerned about aspects of the traditional art world flooding the NFT space.

“Now, you also see marketplaces paying attention to certain big names. They care about the big artists that would make huge sales, and not necessarily about the art that is being made,” Osinachi said.

Tricky

Oyewumi, who set up her NFTs by herself, found the process to be complicated and experienced a number of unfamiliar technical issues.

She also saw a colleague’s art minted without the artist’s knowledge or permission. As NFTs went viral, scammers took to minting other artists’ work. In early March, illustrator Derek Laufman lashed out at NFT platform Rarible when a Twitter user notified him his art was listed on the website for sale without his knowledge.

Anthony Azekwoh, a 21-year-old chemical engineering student and digital artist, minted his first NFTs last month but finds the NFT space quite “tricky.”

“It’s been very complicated for me as a Nigerian. I come from a place where you make money through years of hard work, but with the NFT space it’s a situation where in a single minute you’re making millions of naira. I feel like the relationship most Nigerians or most people from places like Nigeria would have with the NFT space is, ‘Wow, how does any of this work? How is it possible?’” Azekwoh told CoinDesk.

But it’s not all bad.

Like Osinachi, Azekwoh is wary of the focus on monetization in the NFT world and determined to help other Nigerian artists. With his NFT earnings, he has set up a fund that pledges 200,000 naira to young local artists between the ages of 15 and 25.

Ugwu believes that although the NFT space in Nigeria is still small, it has the potential to propel Nigerianartists to the global stage if local digital art curators emerge in the coming years.

There are “a lot of great artists out of Africa, and Nigeria, who are focused on physical work, and I’m all for them getting a better understanding of the opportunities of NFTs,” Ugwu said.

Despite the many complexities, younger artists like Oyewumi and Azekwoh, inspired by veterans like Osinachi, are slowly working out the kinks and establishing themselves as global artists of the digital era.

NFT newcomer Oshomah sold his first multimedia artwork two weeks ago and has minted his second. Oshomah said that at the moment he could probably only name 10 Nigerian NFT artists, but there are hundreds of talented artists who, with some help, can enter the space in the months and years to come.

“You will see a lot of artists come out of Africa [who] will give Beeple a run for his money,” Oshomah said.

By Sandali Handagama

Coindesk

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Nigeria’s crackdown on Bitcoin echoes global crypto conundrum

Lagos, Nigeria – When the Central Bank of Nigeria (CBN) issued a circular in early February warning banks and financial institutions that “facilitating payments for cryptocurrency exchanges is prohibited” and that they needed to identify and close accounts associated with them, it set the country’s crypto community alight.

“I was in a danfo [a yellow public transport bus that operates in Lagos] heading home when my phone started buzzing with WhatsApp notifications regarding the CBN ban on cryptocurrency transactions,” said David Akinwale, a 25-year-old financial analyst who trades in cryptocurrency. “It was really disappointing and sad. While other countries are embracing the use of Bitcoin and cryptocurrency, Nigeria is doing the reverse.”

This week, a representative for Nigeria’s central bank chief Godwin Emefiele reportedly sought to clarify the February 5 directive, telling reporters that it was not aimed at discouraging people from trading in cryptocurrencies like Bitcoin, but served to enforce orders in place since 2017 banning crypto transactions in the country’s banking sector.

But the 2017 directive did not prohibit crypto exchanges from using banking and payment channels. It simply required banks and financial institutions to ensure that their crypto-exchange customers have effective anti-money laundering and “anti-terrorism” financing controls in place.

The backlash and confusion echo a crypto-drama unfolding around the world as virtual currencies like Bitcoin grow in popularity and scale new heights during a time of unprecedented financial uncertainty stemming from the coronavirus pandemic, as well as uniquely domestic challenges.

In the United States this week, Federal Reserve Chairman Jerome Powell raised concerns about the role cryptocurrencies play in facilitating criminal activity, as well as their infamous volatility, calling Bitcoin “more of an asset for speculation” than a substitute for the US dollar.

In Iran, officials recently targeted crypto exchanges and even pinned blamed for high levels of air pollution on Bitcoin mining.

The developments illustrate the regulatory conundrum governments face with crypto assets that by design are intended to be decentralised and beyond their reach, but which are part of a rapidly evolving sector of global finance that pivots on innovation.
 

Africa’s biggest Bitcoin market

Nigeria is Africa’s largest economy, its most populous country, and home to one of the youngest populations in the world. Throw in a burgeoning tech sector and it’s easy to see how Nigeria has become the continent’s largest Bitcoin market by trading volume, according to UsefulTulips.org, which gathers data from crypto exchanges Paxful and LocalBitcoins.

That ascent to Bitcoin prominence is rooted in a sharp fall in remittances during the pandemic, as well as the country’s state coffers and local currency, the naira, being ravaged by the twin blows of COVID-19 restrictions and plummeting crude prices.

In an effort to keep increasingly scarce US dollars from leaving the country last year, some Nigerian banks reportedly placed curbs on offshore debit card transactions and limited cash withdrawals.

Against this backdrop, Bitcoin and other cryptocurrencies soared in popularity last year, as both a hedge against the eroding purchasing power of the naira, as well as a way to move money around more easily.

‘With Bitcoin, I could bypass the $100 limit on my naira debit card and do all my transactions seamlessly,” Bola Williams, a 33-year old software developer, told Al Jazeera. “But the ban on crypto has now made it even more stressful.”

But it does not appear to have curbed appetites for crypto. Bitcoin trading volumes on Paxful and LocalBitcoins topped $9m in the seven days ending March 8, according to UsefulTulips.org, compared to roughly $7.55m in the seven days ending February 8.

The data suggest that despite the CBN directive, Nigerians are determined to leverage cryptocurrencies to increase their earnings, especially with rising inflation and limited access to foreign exchange liquidity.

“The ban was never going to stop a ship that is far gone on sail,” Eric Annan, co-founder of cryptocurrency trading platform KuBitX, told Al Jazeera.

Annan said if anything, the CBN directive only served to amplify the popularity of Bitcoin and pique the curiosity of crypto sceptics.

“No single government can stop an idea whose time has come to a generation who have added to the GDP [gross domestic product] of the internet,” he said.
 

Political pushback

The CBN directive also met pushback from some Nigerian politicians.

After the order was released, the Nigerian Senate summoned CBN chief Emefiele to explain the opportunities and threats cryptocurrencies pose to the nation’s economy and security.

During the February 23 briefing before the Senate Committee on Banking, Emefiele highlighted the role cryptocurrencies play in money laundering, “terrorism” financing, illicit arms purchases, and tax evasion.

“Cryptocurrency is not legitimate money because it is not created or backed by any Central Bank,” Emefiele said. “It has no place in our monetary system at this time and cryptocurrency transactions should not be carried out through the Nigerian banking system.”

That assessment drew criticism from crypto proponents.

“Whatever reason that necessitated the move for the current restriction of banking services to crypto traders and exchanges by the CBN could have been resolved through dialogue and collaboration,” Chimezie Chuta, the founder/ coordinator of the Blockchain Nigeria User Group, told Al Jazeera.

“In saying that ‘cryptocurrencies are not legitimate money’ he obviously has forgotten the origin, what money is, and its purpose,” he added, noting that “cryptocurrency is a property or commodity and thus not an illegal asset class.”

Nigeria’s Vice President Yemi Osinbajo has also called for a less heavy-handed official approach – one that would vigorously regulate cryptocurrency transactions to address serious concerns “without necessarily killing the goose that might lay the golden eggs”.

“We’ve seen in many other sectors disruption makes room for efficiency and progress,” he said.

Al Jazeera

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Why Bitcoin has been so successful in Nigeria

Back in 2017, the idea of Bitcoin in Nigeria was an interesting one that generally got the attention of two main categories of people: the early adopters with an interest in emerging technologies and the “hustlers” that are always on the lookout for new ways to make money. The latter category consisted of the same people that turned to the Mavrodi Mundial Movement (MMM), one of the world’s largest Ponzi scheme, when it became popular in 2016.

Unfortunately, the average Nigerian has struggled greatly in the country’s current economy, and many have been forced to seek out alternatives that offered tangible opportunities to make money. When cryptocurrency exchanges started to show up in Nigeria, they made buying and selling bitcoin more convenient for these categories of people, because the alternative was to buy bitcoin from a stranger with no assurance of getting what you paid for. And, as a result, the country’s cryptocurrency community began to grow.
 

BITCOIN’S RISE IN NIGERIA

The booming cryptocurrency market in Nigeria today has come a long way from those early days as the adoption rate in Nigeria, Africa’s largest economy, keeps growing year after year. A major reason for the exponential growth of the Nigerian cryptocurrency community can be linked to the country’s predominantly young population — it is significantly more tech-savvy than its parents, and it has taken to the internet in hopes of finding jobs and income that often prove fleeting at home.

Understandably, the young population went digital in its pursuit of a better life. Many younger Nigerians became freelancers in their chosen fields and started offering their services to the international community where their work is valued. But, once again, the challenge of getting paid for their work because of their location was difficult. In the same vein, Nigerians in the diaspora also experienced a similar challenge when sending money back home, as exorbitant charges from foreign banks and money transfer companies discouraged many from doing so.

Meanwhile, things kept getting worse for the average Nigerian, with the naira experiencing incessant inflation, making the country’s fiat a poor store of value; traditional banks charging ridiculous fees for simple transactions; and a rise in the unemployment rate. In the midst of all of these issues, the gospel of Bitcoin kept spreading as the foremost cryptocurrency’s major features made it look like it was specifically designed to save Nigerians.
 

WHY BITCOIN IS SUCCESSFUL IN NIGERIA

Bitcoin’s decentralized features, its ability to furnish cheaper and faster transactions and its rising value ultimately turned the attention of many Nigerians to it, so that in a 2020 COVID-19 halted world, Bitcoin had finally found a home in Nigeria. And this reflected in the numbers, as our cryptocurrency exchange, Yellow Card, processed over $200 million in cryptocurrency volume in 2020, with most of that volume coming from Nigeria. Blockchain.com also reported that there was an increase from Nigeria in the number of new Bitcoin wallets created on its platform.

Bitcoin offered the glimmer of hope that many Nigerians desperately needed as they could finally see the chance of attaining financial freedom to be more likely than ever. And, in the following ways, Bitcoin has become successful in Nigeria:

1. As a store of value: The naira’s continuous inflation has made many lose confidence in keeping their hard-earned money in fiat. Bitcoin offers a better alternative as its adoption across the world increases, thus driving up its demand and, consequently, its price.
2. As a better investment alternative: Many Nigerians have turned to trading and investing in bitcoin as a form of passive income and, despite the cryptocurrency’s volatile nature, the returns over time have seen many become millionaires.
3. As an enabler of easy transactions: The sending and receiving of money across the border for the payment of goods and services, or to loved ones, has never been easier with bitcoin, thanks to its cheaper network rate and faster transfer time than traditional remittance systems.

While a recent directive from the nation’s apex bank reiterating that regulated financial institutions are not authorized to offer services to cryptocurrency exchanges, the interest in Bitcoin has only continued to grow in the country as, coincidentally, institutional investments have propelled the price of bitcoin past $57,000, as of the third week of February.

It is, therefore, no longer a matter of if Bitcoin will continue to bloom in Nigeria, but a matter of how long before it reaches everyone in the country. The Central Bank of Nigeria’s directive may take some exchanges in the country offline for the time being, but peer-to-peer transactions, which have always been an extremely popular and active trading method in Nigeria, will only grow more quickly.

By Joel Ogunjimi and Chris Maurice

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In Nigeria, One Bitcoin Can Cost $68,000. Here’s Why

Bitcoin has already passed the $68,000 mark in Nigeria, but that’s if you use the official exchange rate.

Awosika Ayodeji, a Nigerian blockchain project designer, isn’t complaining. He is happy to wake up and see bitcoin prices quoted using unofficial U.S. dollar exchange rates because it means he’d be getting more naira per dollar when he converts his crypto earnings to his local currency.

At the same time, however, “buying [bitcoin] becomes more expensive, too,” Ayodeji noted.

On Friday, Nigeria’s official exchange rate for the U.S. dollar was around 380 naira per dollar. Using this rate, a bitcoin listing on peer-to-peer platform LocalBitcoins in Nigeria of around 26,000,000 naira converted to $68,246. On the surface, this looks like a hefty 24% premium, which in this context refers to bitcoin’s price being much higher in specific locations than it is on average worldwide.

In Nigeria, these premiums aren’t consistent. On peer-to-peer platform Paxful, the listed bitcoin prices were based on $1 trading for around 475 naira. This rate converted to $54,736, a price much closer to the average bitcoin trading price of the day. In fact, the informal market dollar exchange rate in Nigeria on Friday was around 478 naira, reflecting the rate seen on Paxful and the bitcoin prices listed on LocalBitcoins.

In emerging markets that are facing a currency crisis, bitcoin prices can actually shed light on the informal market for U.S. dollars. In Argentina, Latin American crypto exchange Bitso listed the bitcoin price at 8,700,993 Argentinian pesos on Friday, which converted to a whopping $98,000 using the official exchange rate, which was around 89 Argentine pesos per dollar. But bitcoin listings on exchanges like Bitso indicated the dollar was worth around 150 pesos, reflecting the informal going rate for the dollar.

Yele Bademosi, chief executive officer at social payments app Bundle Africa said exchanges are most likely using informal dollar rates, thus inflating bitcoin’s price in local currency. According to Andrés Ondarra, country manager for Argentina at Bitso, the market exchange rate for the dollar is usually higher than the official exchange rate in Argentina as well.

“This is mainly reflecting the difference between the informal U.S. dollar rate and the official one. The gap between the official and the informal dollar in Argentina is around 70%,” Emiliano Limia, press officer at Argentine crypto exchange Buenbittold CoinDesk via an email.

Exchanges using informal rates instead of official ones indicate the local bitcoin markets exist outside of government rules, and that bitcoin trading might reveal the real value of the local currency against the dollar.

According to Gina Pieters, a professor of economics and the University of Chicago who published a paper on how bitcoin can detect exchange rate manipulation and capital controls, bitcoin premiums can occur for a number of reasons.

“It seems unlikely that the price should be that much higher unless there is the manipulation of the nominal exchange rate channel,” Pieters said in an email to CoinDesk, referring to the price of one currency in terms of another.

In fact, the thesis of Pieters’ 2016 paper was that bitcoin trading can be used to approximate unofficial exchange rates, “which, in turn, can be used to detect both the existence and the magnitude of the distortion caused by capital controls and exchange rate manipulations.”
 

Informal exchange rates

Due to the falling purchasing power of the naira, on any given day, Nigeria has multiple exchange rates for the dollar. The informal exchange rates are typically much weaker, with Nigerians having to dish out more naira per dollar, indicating the local currency may be worth less than what the government says.

According to a chapter in economist Koji Kubo’s book about Myanmar’s foreign exchange market, multiple exchange rates emerge within the unofficial market when governments implement “exhaustive exchange restrictions” or limitations on the amount of foreign currency that could be bought or sold.

In 2020, Argentina’s government imposed strict controls on the purchase of U.S. dollars, restricting the amount of dollars citizens could buy and hold to $200, in an attempt to stop capital from flowing out of the country. The dollar black market flourished as a result, with people scrambling to buy more dollars to protect their wealth, and even paying more pesos per dollar. This quickly spilled over to crypto as Argentines tried to ditch the peso for stronger currencies: demand for bitcoin soared in 2020.

Meanwhile, Nigeria’s facing a U.S. dollar shortage: in 2020, local media reportedNigerian banks were limiting the amount of dollars Nigerians can spend abroad to as low as $500. Thanks to the scarcity of dollars that could not meet local demand, the value of the naira fell in local informal markets as people showed willingness to pay more naira per dollar.

“The general market is now setting the price to $480 as that seems to be the present value generally accepted between buyers and sellers,” Ayodeji said.

The lower informal exchange rate can mean sending money to family in Nigeria or Argentina in bitcoin can be beneficial as one bitcoin can get you more of the local currency, but this also means that the purchasing power of the local currency is weakening. Sending money out of the country can be problematic, as your wealth converts to less dollars.

It’s typically difficult to estimate local informal dollar rates: Ayodeji said black market currency merchants might ask for even more naira per dollar. But bitcoin conversions can calculate a decent estimate, Ayodeji said.
Inflation

Still, premiums can exist even after you factor in the difference in exchange rates. One possible reason is, in countries with high inflation, people may be willing to pay more for bitcoin.

“In the euro area the prices are pretty much the same as spot prices in big centralized exchanges,” Jukka Blomberg, chief marketing officer at LocalBitcoins, said in an email. But “in countries such as Venezuela, there can even be quite big premiums.”

Blomberg explained this is because Venezuelans who are willing to sell their bitcoin in exchange for their local currency typically want a higher premium due to the risk they have to take by accepting a highly inflationary currency such as the bolivar. In Venezuela, where the inflation rate hit a staggering 10 million% in 2019, and the value of the bolivar was dropping almost daily against the U.S. dollar, people began turning to bitcoin. In fact, the local demand for bitcoin drove crypto adoption in Venezuela ahead of other hyperinflationary countries like Argentina.

Nigeria is also an inflationary country, and citizens have been turning to bitcoin to weather value drops in naira. Demand for bitcoin was so high that the central bank of Nigeria first ordered banks to shut down all accounts associated with crypto trading, and released a five-page explainer that said the measure was taken to protect the country’s financial system.

According to Ayodeji, the naira exchange rate on crypto platforms changed drastically the days after the ban was announced, perhaps driven by the panic that followed, and the demand for bitcoin dropping slightly: the unofficial exchange hit between 410 and 420 naira per dollar, Ayodeji said.

“But the market circled back,” he said. 

By Sandali Handagama

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Bitcoin: Nigeria bites back against cryptocurrency trading

Bitcoin. The currency of choice for drug dealers, terrorists, investors, spaceship enthusiasts — and ordinary people, including many of us who just want to get paid for an honest day’s work.

Bitcoin. Because of its decentralised nature, it’s almost impossible to control how it moves. Like any cryptocurrency, that’s a huge part of its appeal. And that’s also what makes it a threat.

Bitcoin. Not available in Nigeria. Try again later.
 

Get paid, pal

A few weeks ago, I was notified that payment for work I’d done had been made to a PayPal address I had provided. It wasn’t the first time — I’ve been working with this company for most of 2020.


It’s not easy to get your own Paypal account in Nigeria, so I had an arrangement with a friend who did have one: whenever I was paid she would transfer the funds to my Nigerian bank account, using a remittance service.

In this case, it was Transferwise, one of the international money transfer operators (IMTOs) many here on the continent and in the diaspora are already quite familiar with. Others include World Remit, Mukuru, Western Union and the like.

Most of these companies allow for cash pick-ups, or mobile-money deposits linked to your cellphone — or they can even deposit money straight into your bank account. They certainly could here in Nigeria … until two months ago.
 

No money, no problems

On 4 December, the Central Bank of Nigeria (CBN) announced a new policy that made it nearly impossible to make direct payments to Nigerian bank accounts using these remittance services.

The central bank’s announcement — widely thought to be in response to #EndSARS protests — instructed banks to limit all diaspora remittances to “domiciliary” accounts in the name of the beneficiary. This is a type of foreign currency account that allows the receiver to receive payments in non-Nigerian currency and exchange it to naira. But to get one of these accounts you need multiple references, as well as a $100 minimum deposit to set it up.

Without a domiciliary account, the bank could still pay you in foreign currency, but then you need to fill out forms and pick it up over the counter. And then it’s up to you to exchange it for naira: either at the bank, or on the black market if that’s your thing — with all the extra fees and criminal liability that entails.

The hassle really starts to outweigh the hustle, in other words. Which, I guess, was the point.

The central bank had other points to make: it also instructed banks to close all naira accounts opened specifically to receive inflow from IMTOs. In effect: no more remittance payments. This development has greatly troubled Nigerians in the diaspora trying to send money to their families, as well as those living in the country and earning in non-Nigerian currencies. Like freelance journalists writing for The Continent, for example.

Now, when you open Transferwise and attempt to make a transfer in naira you get the message, “sorry, we’ve closed all transfers to NGN due to new regulations from the Central Bank of Nigeria.”

Some other IMTOs have workarounds, like cash pickup, but it’s messy. Too messy, if you’re trying to run a legitimate business.

And, so, I was stuck. The work was done, the payment had been made — but I couldn’t access the funds. Eventually, however, I asked for help on Twitter, and so it was that bitcoin appeared on my radar.
 

Welcome to the global economy

Several people suggested I try SendCash Africa, which is owned by BuyCoins, a Nigerian app that helps Nigerians to buy and sell bitcoin and other cryptocurrencies with their Nigerian debit card.

According to Ire Aderinokun, a developer at BuyCoins, the company wants to put Nigerians on an equal footing with the rest of the world. ‘‘The core goal is to enable Nigerians and Africans to participate in the global economy,” he said. ‘‘For no one to be limited by their local currency.”

This is good news for ordinary people trying to make a living! For central banks responsible for managing local currencies? Not so much. Their job is to manage the economy, after all. And sometimes the responsibility to manage gives way to the urge to control.

During the #EndSARS movement, international donations were made to Nigerians who were at the front line or organising protests in their states, as well as to Feminist Coalition. At first, these donations were made using the IMTOs or remittance services.

But when the central bank began to “manage” the accounts of known #EndSARS activists, and issued its December limits on remittance mechanisms, Feminist Coalition created a bitcoin wallet, and bitcoin became the preferred way to donate to the protests, outside the central bank’s influence. This arguably made it possible for the #EndSARS movement to hold out for as long as it did.

So Feminist Coalition was receiving donations, and, thanks to a relatively straightforward sign-up process, I, too, was able to get paid at last.

Until last Friday. On 5 February, the central bank “banned” bitcoin, too.
 

Nigeria puts the ‘ban’ in ‘bank’

In a circular cautioning the public on the risks of transacting in crypto, the central bank informed banks that dealing in cryptocurrency was prohibited, and asked them to please send over a list of any individuals dealing in cryptocurrency — and close their accounts while they were about it.

The letter essentially banned crypto-dealing in Nigeria with immediate effect. I contacted the Central Bank of Nigeria to ask about its reasons for doing this, and how this might affect business, but no one got back to me.

However, according to Abubakar Idris, a financial journalist at Stears Business, the central bank is sticking to its story that blocking the trading of cryptocurrencies such as bitcoin is part of its strategy to prevent financial fraud and the financing of terrorist operations.

“These are legitimate concerns,” Idris told me. “Nigeria does have an infamous international status for scams and online fraud; and has been fighting the Boko Haram terrorist group for more than 10 years now.”

Nevertheless, he believes there are other motivations at play.

“The most crucial of all is CBN’s focus on stabilising the exchange rate. Cryptocurrency gave everybody — businesses and individuals — a way around currency issues, getting better exchange rates and rendering central control measures ineffective,” he said. “By making it harder for people to carry out cryptocurrency transactions, the CBN wants to take back control of the country’s international payment system.”

It worked. At the moment, the only way to transfer money to a Nigerian bank account requires the person receiving it to go to a bank to cash it. This method is easily controlled by the government — as was demonstrated during #EndSARS.

But cryptocurrencies have an irritating habit of bouncing back.
 

Here comes the bounce

In 2020, BuyCoins, the parent company of SendCash, processed crypto transactions worth more than $140-million, according to stats published by its chief executive, Timi Ajiboye. After the December crackdown, SendCash became a primary go-to for Nigerians abroad trying to send money home, and for remote workers and freelancers (including the odd journalist) to get paid.

However, with the new directive of 5 February, the company’s entire business model appears to have been dismantled, leaving many without an easy way to move money. And they’ve gone quiet. BuyCoin and other crypto companies have declined to speak to the press since the directive, so it isn’t yet clear what their next move will be. Crypto is nothing if not cryptic.

But many in the tech sector expect that they will innovate around it somehow.

‘‘Startups themselves are developing workarounds against the CBN’s policy,’’ Idris said. ‘‘In the next couple of weeks, things may feel weird and people may have to learn new ways to deposit money into their crypto wallets. But things will pick up after that. I don’t expect cryptocurrency trading to decline. I actually believe the CBN’s policy has made crypto more popular.”

By Vincent Desmond

Mail&Guardian

 

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“There’s no stopping crypto, [it’s] the future and we won’t let some old fools take our future from us,” one Nigerian bitcoin user who wished to remain anonymous told CoinDesk. “We’re Nigerians. Using the crypto is a way out of poverty for the youth.”

Last week, the Central Bank of Nigeria (CBN) ordered banks to close down accounts associated with cryptocurrencies. But this will not be enough to shut down Nigeria’s cryptocurrency market.

CBN clarified on Sunday that this is not a new order, but a reminder of a directive published in 2017. However, whether old or new, it’s having an impact. In response, banks quickly cut ties with cryptocurrency companies, such as the Binanceexchange and social payments app Bundle, which in turn stopped accepting deposits.

Nigeria has become a hot spot for cryptocurrency as an alternative to the naira, a national currency prone to depreciation. Nigerians have found various use cases for decentralized digital currencies, from trading bitcoin to make a living to using it to dodge trade restrictions with China. During protests against police corruption in the country last October the Feminist Coalition was one activist non-profit accepting donations going toward the protests. When the group’s bank accounts were frozen and it couldn’t accept funds, it switched to bitcoin donations because the payment method could not be frozen.

Some Nigerian cryptocurrency users aren’t happy about the directive and have said they plan to continue using cryptocurrencies by using methods that are harder to detect and stop.
 

Moving to ‘peer-to-peer’

Some users think they can get around them by not using centralized exchanges.

“Bitcoin is peer-to-peer, meaning that it can be transacted without intermediaries. Your bank may be able to shut down your account but no one can shut down your bitcoin wallet. This development, while concerning, will not be the end of bitcoin in Nigeria,” said Nigerian Bitcoin Core contributor Tim Akinbo on Twitter.

Exchanges such as Binance have been affected because payment partners that store the naira are no longer willing to deal with them due to the directive, putting an indefinite pause on naira deposits to exchanges.

But there’s an alternative: peer-to-peer transactions, where two users connect directly to each other to trade cryptocurrency. In return for bitcoin or other cryptocurrencies, a user might make a bank transfer directly to the other user, or pay that person with cash. Platforms such as Paxful and a Binance’s peer-to-peer platform help connect users to other users so they can coordinate these transactions.

“As we all know, [peer-to-peer] can’t be stopped,” one trader in Nigeria, Lucky, told CoinDesk.

Despite CBN’s directive, several sources in Nigeria told CoinDesk they plan to continue trading bitcoin via peer-to-peer exchanges, and more aired similar conclusions on social media.

“Most people will return to [peer-to-peer] transactions, some will leverage several alternatives that connect crypto to legacy financial systems, like reloadable Visa or Mastercard. Most will simply use crypto as a choice reserve asset. […] A lot of activities will also go clandestine, or underground,” said developer and cryptocurrency educator Chimezie Chuta.

He added he plans to use “alternative channels” to remain a part of the cryptocurrency community.

Crypto exchange Bundle made a similar comment in a statement to its customers about moving to “alternative channels” to ensure they can still buy and sell cryptocurrency. The email stated the exchange will provide more information about how this will work in the coming days.

CBN did not respond to an inquiry from CoinDesk by press time about whether these alternatives are lawful.
 

A mistake?

The CBN order for banks to close accounts associated with cryptocurrency is supposed to curb criminal activity and risky investments. In its clarification, it also listed several reasons why it considers cryptocurrencies dangerous and noted that other central banks and international financial institutions have warned against their use.

“They have all made similar pronouncements based of the significant risks that transacting in cryptocurrencies portend – risk of loss of investments, money laundering, terrorism financing, illicit fund flows and criminal activities,” the letter reads.

Sources in Nigeria disagree, arguing the regulations are a mistake.

“The fact that the CBN sent out this controversial memo to banks and other financial institutions without giving the industry participants and stakeholders an opportunity of dialogue shows how little they know about the Nigeria blockchain and cryptocurrency ecosystem,” Chuta said.

He argued that Nigerians should have a choice over what assets they invest in, especially because the value of the naira depreciates over time and users might want to use bitcoin as a hedge against this continuous inflation. He said many Nigerians are using crypto trading to put themselves through school, thousands of new businesses and jobs are being created by crypto innovation.

“The fact is that this directive was ill-advised, archaic, retrogressive, insensitive, and [smacks] of primitive superstition,” he added.

Some users are waiting to see if CBN issues any more rules or clarifications.

“Decentralized systems are hard to ban. But as for me, I’m waiting for more directives and then I can pick my positions,” crypto enthusiast Bayo Adebayo told CoinDesk, adding: “But putting a ban in the first place is very bad. I don’t like Nigeria. If it is to be banned totally, I will find a way to leave this Nigeria.”

By Alyssa Hertig

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Nigerian Youth Propels the Country to the Top of Google Bitcoin Search Rankings

 

Nigeria, one of the biggest cryptocurrency markets in the world, recently emerged as the country with the highest number of bitcoin searches globally, according to Google Trends data. The data shows that the West African country has a search score of 100, which is more than double that of its nearest rival.


 

Youth-Driven Interest

According to one local report, Nigeria’s rise to the top of bitcoin search rankings signals the growing utility of the crypto in that country. The report also explains that country’s youth have been the decisive force behind this surge in bitcoin searches. This assertion is supported by Senator Ihenyen, the new president of the Stakeholders in the Blockchain Technology Association of Nigeria (SIBAN).

In his reaction to Nigeria’s new status, Ihenyen insists this is hardly surprising for a country with a “median age of 18.4.” He contends that in such a scenario, “interest in bitcoin and its adoption should be expected.”

As the Google Trends data confirms, the Nigerian interest in bitcoin is also decentralized with the Delta State ranked first in that country. Lagos, the “most populous city” in Africa is ranked a distant 17th. According to the SIBAN leader, this decentralization of interest suggests that BTC is seen by the youth as “represent(ing) the democratization of access to global wealth.”
 

Decentralized Interest

Meanwhile, Ihenyen points out that while institutional investor interest in bitcoin is taking hold in countries like the United States, interest for BTC “in Nigeria is as decentralized as the cryptocurrency itself.” The SIBAN president explains:

"Nigerians are experiencing the level of financial inclusion that many have expected for too long. The freedom of money is a powerful thing, especially in a borderless, digital economy. Whether for remittances, e-commerce, bitcoin trading, more and more Nigerians are taking interest in bitcoin daily."


According to Ihenyen, this growing interest be cannot be stopped but “can it be maximized and managed.” He adds that policymakers and regulators should therefore be searching for ways to maximize and manage this interest instead of “looking for the red button.”

In the meantime, the Google Trends data also shows that two more African countries, namely South Africa (2) and Ghana (5), make it into the top five of the rankings. The next highest-ranked African country to feature on the list is Kenya at number 14.

By Terence Zimwara

Bitcoin.com

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Nigeria is Bitcoin Leader in Africa, Says Paxful

Recent data from Paxful has revealed that Nigeria leads Africa in peer-to-peer trading in bitcoin, posting monthly volumes of over $66 million in 2020.

According to a report, the country is closely followed by Ghana, Kenya, and South Africa respectively.

With over 620,000 active Nigerian users on its platform, Paxful in the report disclosed that Nigerians traded around $15 million worth of Bitcoin in April alone, making Nigeria the leader in the African region.

“Nigeria, Ghana, Kenya, and South Africa are our main markets in Africa. There’s no question that emerging markets are the future of the crypto economy.
“That’s been clear to us for some time, as we see on a daily basis how tech-savvy Africans are using Bitcoin to invest, trade, send money abroad and accumulate wealth.

“Bitcoin helps improve lives and gives opportunities for personal and entrepreneurial development. Paxful is all about bringing financial inclusion to the emerging world and we’re ecstatic to help so many people with limited access to the traditional financial services,” Paxful CEO and co-founder Ray Youssef said.

It noted that Nigeria has continued to witness a huge rise in the adoption of digital money as a means to store value, preserve wealth, trade, and settle day-to-day payments.

“Another great use case for crypto, popular with the local traders and businesses in Nigeria, is helping them hedge against weak naira partially caused by the shortage of US Dollars in the country,” it added.

Since launching five years ago, global transactions on the Paxful platform have grown by over 25 per cent from October 2019 to October 2020.
A large proportion of the transactions is attributed to the African market, with Nigeria leading the pack.

“Committed to providing users with a cost-efficient, accessible trading system on its platform, Paxful is strengthening Nigeria’s crypto market with varied payment methods that meet the needs of users.

“The company currently has over 300 payment methods all geared to meet users’ needs and includes a variety of local payment options, including BuyCoins, Bitsika, and Carbon.

“Paxful is a people-powered marketplace for money transfers with anyone, anywhere, at any time. Their mission is to empower the forgotten four billion unbanked and underbanked around the world to have control of their money using peer-to-peer transactions.

“The company has over 4.5 million users globally who you can instantly buy and sell Bitcoin (BTC) and Tether (USDT) using over 300 different payment methods,” it added.

This Day

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Unconfiscatable? Using Bitcoin to Resist Police Extortion in Nigeria

 

Nigerian programmer Adebiyi David Adedoyin hears knocking at his apartment door. He’s just woken up and headed to the bathroom. He decides to take his time. He’ll answer in a minute.

But the knocking grows louder – and more urgent.

Inching open the bathroom door, Adedoyin sees someone clawing open his apartment window.

“Someone’s there,” a voice says.

It’s probably the police trying to break in, he realizes, from all the stories he’s heard.

Adedoyin is sure he hasn’t done anything wrong. But with the Nigerian police, that doesn’t matter. He still might need to brace for trouble.

As he thinks through what to do next, Adedoyin is thankful a chunk of his money is stored in bitcoin. His crypto wallet is in a hiding spot the officers probably won’t think to check. That means they’re less likely to steal it.

Police corruption

While there are many principled police officers in Nigeria who help tackle crimes, police corruption is pervasive. Many Nigerian police are known for extorting and even sometimes torturing citizens rather than helping them solve legal quandaries.

“Right there in the bathroom, where I was in my boxers with just my phone, AirPods and pack of cigarettes, I could hear them shouting for me to come open the door,” Adedoyin told CoinDesk.

This is a well-documented phenomenon in Nigeria. Over the past several years, an online social media movement has emerged against the police. On Twitter, people use the hashtag #EndSARS to publicize the poor treatment they’ve received from police. SARS stands for Special Anti-Robbery Squad, which is a particularly brutal and mistrusted wing of the Nigerian police force.

Human rights research organization Human Rights Watch released a 102-page report outlining the abuses in painful detail in 2010.

“Human Rights Watch’s research revealed that people refusing to pay bribes are routinely subjected to arbitrary arrest, unlawful detention and threats until they or their family members negotiate payment for their release. Extortion-related confrontations between the police and motorists often escalate into more serious abuses. The evidence suggests that police officers have on numerous occasions severely beaten, sexually assaulted, or shot to death ordinary citizens who failed to pay the bribes demanded,” the report reads.

Tricks and strategies

Adedoyin notes that Nigerians have to develop their own tricks to avoid police extortion, especially the younger Nigerians who are the main targets. Some people walk along different routes to avoid walking near the police.

“Now it’s up to each person to prevent oneself from entering such situations,” he said.

The practice is common enough that Adedoyin has been extorted by police officers more than once, and his friends have, too.

Corrupt police officers take their detainee’s phone. They scan through it looking for SMS or email messages signalling how much money the detainee has in the bank.

If the police officer finds the detainee doesn’t have any money, they’re less likely to waste their time.

Locked in the bathroom, Adedoyin rapidly scrolls through his most recent messages, deleting any bank statements or emails showing how much money he has.

The bathroom door lock breaks.

Adedoyin is confronted by four police officers, all carrying guns. One slaps Adedoyin and asks him why he didn’t come open the door. As Adedoyin expected, another officer snatches his phone and scans through for any grain of evidence that Adedoyin has money.

Adedoyin didn’t have time to delete everything. The officer finds some evidence of how much money he makes. They finally let him go once he pays.

Where using bitcoin comes in

It was a bad experience. But Adedoyin is happy that his bitcoin trick worked – most of his money is still safe.

“The money they collected to let me go in that case would have been a lot more if I had more money in my account. But I had most of my money in bitcoin,” Adedoyin said.

Why does using bitcoin help in this situation? Adedoyin’s ploy is to pretend that he doesn’t have much money to extort. His solution is to store his money in a bitcoin wallet instead of in a bricks-and-mortar bank. Since bitcoin’s less common, it’s less likely the police officers find it.

Put another way, he’s not putting his money into bitcoin as a safeguard because of its decentralization properties. Rather, he just thinks police officers are far less likely to look for a crypto balance than a fiat balance to see if he’s ripe for extortion.

“[The officers] don’t think to check [bitcoin] wallet apps, because most of them don’t even know what bitcoin is and even think bitcoin is a scam,” Adedoyin said.

The second reason he has bitcoin is he hopes the price will keep rising. Like many other bitcoiners in the region, he sees it as an investment that might pay off in the future.

But for now, he keeps most of his money in bitcoin as security against the next time the police come banging on his door.

By Alyssa Hertig

Coindesk 

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Chukwuemeka Ezike sends thousands of dollars worth of bitcoin a month in order to trade with Chinese exporting companies.

In return, he receives spare auto parts, construction equipment, and juices for a family business his father started more than 30 years ago. Ezike works full-time at Singapore-based crypto exchange Huobi as its community manager but helps with his family’s business on the side.

He says bitcoin is faster than exchanging currencies the old-fashioned way. And he can use it to leapfrog bank limits of $10,000 a day, which he often needs to do.

Ezike doesn’t pay the manufacturer directly. Over WeChat, he works with a middleman named “Allen” who exchanges Ezike’s bitcoin for renminbi, China’s national currency, and then passes it on to the manufacturer. Ezike couldn’t divulge which companies he deals with, saying, “The Chinese are sensitive with the data that’s shared.”

He’s one of several Nigerians using bitcoin for this purpose. Ezike even helps other Nigerian companies make similar cross-border transactions with bitcoin.

Using bitcoin for global trade

In several ways, bitcoin makes sense for global trade. The currency jumps borders with ease, where other currencies encounter friction. If the counterparty is willing to receive bitcoin on the other end, it’s often faster and cheaper than legacy payments. But this can be a big “if,” since bitcoin is a newer way of transferring money and people aren’t exactly used to it quite yet.

While bitcoin has these nimble properties, it hasn’t disrupted international trade and value transfer just yet, especially given the currency’s current limitations. If more people use bitcoin at once, the network becomes congested and payments slow down.

Behind the scenes, developers around the world are working on the Lightning Network to fix these problems, so that more people, maybe one day even millions, can all use bitcoin regularly without seeing a spike in fees and sluggish transactions.

All that said, some Nigerians are becoming reliant on using bitcoin as a way to trade internationally, and are finding bitcoin has significant benefits over legacy financial systems.

Foreign exchange woes

Nigerian bitcoin entrepreneur Chimezie Chuta has another theory for why some are using bitcoin for trade with China and beyond.

Like most other countries in an increasingly globalized world, Nigeria imports a significant percentage of the goods that it uses. As Chimezie Chuta put it: “Nigeria is a very import-heavy country. Food industry, drugs, you name it, construction equipment, cars.” Much of these goods are bought from Chinese manufacturers. “Nigeria’s economy is heavily import dependent and China is a major import partner to Nigeria,” Chuta adds.

Nigerians have to struggle with this process, though. “Access to [foreign exchange (FX)] for importation by Nigerian business owners is highly limited because the [Central Bank of Nigeria (CBN)] has limited liquidity to cater for everyone,” Chuta told CoinDesk.

If Nigerians want to reap the benefits of trade, they need to hunt down a way to exchange their naira (Nigeria’s national currency) for other currencies. In Nigeria, finding U.S. dollars or Chinese remnibi is not an easy task. “Importers typically rely on the black market for the additional FX needed and that comes at a very high price,” Chuta said. This phenomenon has been covered in Bloomberg, for instance.

This is one of the other reasons Ezike has turned to bitcoin as an alternative. “The hustle for [the] dollar and all that is quite a thing I love to avoid,” Ezike told CoinDesk.

With bitcoin, he can “take out all international banking routing processes,” he said.

Others are reaching the same conclusion.

“Chinese exporters have expressed willingness to accept bitcoin payments for their goods; hence, many business people in Nigeria find it more convenient to make such payments with bitcoin for obvious reasons,” Chuta said, adding that bitcoin is speedier, open and trustless.

More naira problems

Entrepreneur Monyei Chinazaekpele was able to buy clothes, COVID-19 masks and tests from House of Trippyin China, to resell to customers in Nigeria.


He decided to use bitcoin after experiencing mounting frustration with current banking limitations, especially their impact on global trade. “I was enlightened about the monetary policies on the ground. I was shocked to my nerve,” he told CoinDesk.

Chinazaekpele reiterated Chuta and Ezike’s point that foreign exchange is tough in Nigeria. “You can’t easily switch to other currencies,” he said, adding that he’s hopeful it’s just “a matter of time” before this situation improves.

“Basically, bitcoin is stress free to use and honestly, the naira is not a good store of value,” Chinazaekpele said, pointing to the naira’s 12% inflation rate, which means the value of the currency depreciates by that much value every year.

Bitcoin’s price fluctuates, and sometimes the price goes down. But Chinazaekpele argues that bitcoin generally doesn’t have this inflation problem, since over the long term the price has been going up.

Chinazaekpele’s also looking to buy a cashew processor with bitcoin, but he’s still working out the details with the factory, which is also located in China.

Keeping it on the down-low

All this trade with bitcoin is happening behind the scenes. Businessmen and women on the ground aren’t exactly eager to publicize that they’re using bitcoin for international trade. For one, the legality of cryptocurrency is fuzzy in the region.

The CBN has issued several warnings to banks. The latest in 2018 advised banks “not to use, hold or transact in any way with the technology.”

“In the bitcoin space we don’t know what reaction to expect, so we try to be a little bit discrete,” Ezike told CoinDesk. That’s why he doesn’t want to reveal the name of his father’s importing business. By only revealing his individual name, he’s less fearful that the Nigerian government will “attack” the business.

“We have had accounts frozen at some point due to bitcoin transactions,” Ezike said. “We had to appeal to re-open them.”

He added that it’s the same situation in China, which is why the people he transacts with there “ensure they [keep] a low profile.”

As for the relationship between the government in Nigeria and crypto, Ezike said that “they are really confused about what to do with it. But hopefully they will embrace it.”

By Alyssa Hertig

Coindesk

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Blockchain.com revealed last week the most trending countries based on its web wallet creation. Currently, the total number of unique Blockchain wallets created is more than 52 million.

“In July we saw a number of countries increase their fraction of total Blockchain wallet transactions, most notably Peru, India, and Indonesia,” the company described. Other countries that made the top 10 list of increased transactions are Côte d’Ivoire, Nigeria, Japan, the Philippines, Venezuela, Bangladesh, and Bulgaria.

“Japan is once again in the top 10, while Hong Kong and Morocco haven’t been as active in the past two months,” the firm continued. The top countries with a decrease in Blockchain wallet creation are South Korea, Denmark, Morocco, Dominican Republic, Hong Kong, Kenya, Moldova, Brazil, Vietnam, and the United Arab Emirates.

The firm’s data science team highlighted Nigeria as the most trending country since April, coinciding with Google search data which pointed to Nigeria as the country with the most relative interest in bitcoin. Blockchain.com provides a Bitcoin block explorer service, a cryptocurrency wallet, and an exchange supporting bitcoin, bitcoin cash, and ethereum. The team revealed:

"Nigeria has been the most trending country in recent months. It has increased by 60% its usage of Blockchain.com web wallet since April 2020."

Last month, Nigerian media reported that the Ministry of Justice had tabled before the National Assembly the bills that will provide the legal framework for bitcoin and other cryptocurrencies, citing the country’s Attorney General, Abubakar Malami. “The expected bills will prepare Nigeria for emerging realities relating to digital cash, bitcoin and e-currency,” Malami was quoted as saying.

News.Bitcoin.com recently reported that Nigeria led sub-Saharan Africa in peer-to-peer (P2P) bitcoin trading but the country is still laden with crypto scams.

Meanwhile, India ranked second on Blockchain’s list of increased wallet creation but the country still does not have crypto regulation and there are reports of the government considering a ban on cryptocurrencies.

Local lawyer Mohammed Danish explained that the “Supreme court judgmenthas helped big time in increasing the curiosity around crypto.” He added: “Even in legal fraternity I see lot of people taking huge interest. But this curiosity is of course limited to a certain age group.” Policy 4.0 CEO Tanvi Ratna commented on Blockchain’s data:

"Despite the uncertain regulatory climate, India ranks second in a global survey of rise in crypto usage for July vs June."

By Kevin Helms

Bitcoin.com

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Nigeria becomes eight African nation to welcome bitcoin ATMs

Africa’s largest country has welcomed its first Bitcoin ATM.

Blockstale BTM, the company that installed the ATM in the Dazey Lounge and Bar in Lagos state, plans to launch more than 30 more terminals across Nigeria.

“Despite all the legal uncertainties about cryptocurrencies in Nigeria, Nigerians happen to be the highest crypto traders in Africa,” Blockstale’s chief executive and founder, Daniel Adekunle, told local media on April 1.

Adekunle developed his Bitcoin ATMs in partnership with a tech firm based in Shenzhen, China.

Nigeria welcomes Africa’s 15th Bitcoin ATM

Despite being home to the largest trade volume in Africa, Nigeria is the eighth country in the continent to host a Bitcoin ATM — with Blockstale’s comprising the 15th in Africa.

According to CoinATMRadar, South Africa is home to seven crypto ATMs, Ghana hosts two, and Botswana, Djibouti, Kenya, Uganda and Zimbabwe each have a single terminal.

With Nigeria comprising Africa’s largest economy and population, the country’s first Bitcoin ATM may be a signpost for broader adoption across the continent. Coinstale’s terminal is only the second Bitcoin ATM in West Africa.

Nigerian LocalBitcoins volume drops after KYC overhaul

Recent weeks have seen roughly 220 Bitcoins, or $1.38 million worth, of peer-to-peer (P2P) trade between BTC and Nigerian Naira on LocalBitcoins.

However, Nigerian LocalBitcoins has dropped by roughly 50% since the P2P platform strengthened its KYC requirements during September 2019.

Nigerian ‘Bitcoin’ searches top Google Trends

Nigeria also consistently tops Google searches for ‘Bitcoin’ — driving nearly twice the traffic as the second-ranked country, Austria, according to Google Trends.

Three of the top five ranked nations for ‘Bitcoin’ searches are African — with South Africa and Ghana ranking third and fifth respectively.

By Samuel Haig

Cointelegraph