Bitcoin adoption in Nigeria has soared over the last five years as the country’s central bank adopted defensive measures to support the local fiat currency, the naira, and slow its rapid decline.
Nigeria is the No. 2 bitcoin peer-to-peer market after the U.S.
Data from the bitcoin peer-to-peer (P2P) marketplace Paxful showed the West African country ranks second in trading volume with more than $566 million worth of bitcoin traded between 2015 and 2020.
The U.S. traded $3.75 billion, while China came in at No. 3 with $181 million traded in the same period.
Restrictions by the Central Bank of Nigeria on movement of money in and out of the country resulted in cross-border liquidity challenges. This pushed more people, businesses and charity organizations to use bitcoin to circumvent the limits, according to Paxful CEO and co-founder Ray Youssef.
“Africa’s largest economy has problems and restrictions in sending and receiving money from inside and outside its borders,” Youssef said in analysis shared with news.Bitcoin.com.
Nigerians have traded more than 60,200 BTC on the Paxful platform since 2015.
On Dec. 16 the Central Bank of Nigeria directed international money-transfer operators to cease processing diaspora remittance payments in naira. The bank said this was in line with a new policy of requiring Nigerians to receive international payments only in their domiciliary accounts. A domiciliary account is a type of account that allows you to fund it with foreign currencies such as dollars, pounds or euros and enables you to do foreign transactions on that account. You can use a domiciliary account to transfer money to another country or receive foreign currency from another country.
In 2015, the central bank called for the regulation of bitcoin to prevent it from being used for money laundering.
Some small businesses in Nigeria said they managed to remain afloat during a recent coronavirus lockdown characterized by anti-police riots, by using bitcoin to make payments for imported goods.
Nigerian expatriates also send remittances using crypto platforms as they seek to avoid the central bank’s “fixed” exchange rate of 380 naira for every U.S. dollar. The naira is currently exchanging at about 480 to the greenback in the black market.
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“This year cryptocurrency popularity and usage by Nigerians has grown by leaps and bounds,” said Nena Nwachukwu, Nigeria regional manager at Paxful. The coronavirus pandemic also compelled more people to actively search for other means to secure their wealth, she added.
This growth has forced the Nigerian government to develop a new framework for blockchain and cryptocurrencies, a move that could accelerate adoption in Africa’s largest economy.
