Bitcoin ‘Can’t Be Stopped’: Nigerians Look to P2P Exchanges After Crypto Ban

“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

Related stories: Nigeria is forging on with crypto despite regulatory hurdles

Nigeria Among Countries With Highest Crypto Usage Increase

Nigeria is Bitcoin Leader in Africa, Says Paxful

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

Related stories: Nigerians Are Using Bitcoin to Bypass Trade Hurdles With China

Nigeria Among Countries With Highest Crypto Usage Increase

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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 

Related stories: Nigerians Are Using Bitcoin to Bypass Trade Hurdles With China

Video - Nigerian returns bitcoins worth $80,000

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

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