As much as ordinary people in inflation-plagued countries such as Nigeria appreciate cryptocurrencies, the financial authorities of these nations (with a few minor exceptions like El Salvador) are obsessed with preventing the locals from using crypto. The roadblocks put in place may take different forms, but they can only change the route, not the destination – top cryptos still remain a desired investment asset for many Nigerians.

Here we discuss why P2P marketplaces have become the most popular avenue for buying crypto with Naira, and which of them are worth using in Nigeria specifically.

What Is a P2P Crypto Exchange?

P2P means peer-to-peer and refers to the fact that trading on a P2P exchange (commonly referred to as a P2P marketplace) occurs between the buyer and the seller directly. In technical terms, on a traditional, orderbook based exchange, you also buy from and sell to another trader. However, there are a few things that are different in important ways.

First of all, on a P2P marketplace, all your trades are personalized – you know exactly what user you are trading with. Then, you are free to choose your counterparty regardless of the price order. When you buy from the orderbook, all your trades are intentionally made impersonal, while your orders are always executed at the best price possible, whether it is a market order executed at any price or a limit order executed at your price.

If we extend our options to instant swap services and payment systems as well, there you can’t even set your own price and have to use whatever price is being asked by the service, with the implication being that you won’t be able to get the market price with them at all.

You may, of course, ask if there is any real market advantage of P2P over orderbooks in this regard, but it is not the only difference anyway.

And finally, the crucial distinction between P2P and other ways of buying and selling crypto (with the only exception of cash, face-to-face deals) is that you pay the seller directly when you buy on a P2P marketplace. In the case of a traditional exchange, your payment is processed by the exchange itself, and you may or may not receive it in the end.

Conversely, a P2P marketplace is not involved in such transactions, so in no case can it rip you off.

Moreover, a P2P marketplace serves as an escrow agent seeing that both sides to the trade live up to their commitments. As a buyer, you are protected by the marketplace which locks the necessary amount of the seller’s coins in escrow, while the seller will always get them back in case the buyer fails to pay.

In this way, a P2P marketplace is a type of a cryptocurrency exchange where the buyer pays the seller directly for the cryptocurrency which is escrowed by the marketplace as a means to enforce the smooth and thorough execution of the trade:

And that takes us to the specific advantages that P2P marketplaces yield to Nigerian cryptocurrency investors and traders.

Advantages of P2P Marketplaces for Nigerian Users

As mentioned in the introduction, countries with pernicious, chronically high inflation don’t tend to be entirely crypto-friendly on average, and that attitude may have many faces.

In Nigeria specifically, the Nigerian central bank prohibited local financial institutions from processing transactions of anyone and anything in one or another way affiliated with crypto. On the whole, it means that simple Nigerians can’t trade crypto on the majority of global exchanges for the local fiat currency, the Nigerian Naira (NGN).

It should be noted that neither cryptocurrency ownership nor cryptocurrency trading is outright prohibited on its own in Nigeria. But it doesn’t change anything in the grand scheme of things – many centralized exchanges withdrew from the Nigerian crypto market.

Some of the still standing are trying to find loopholes and use workarounds. For example, on Luno, an orderbook-based cryptocurrency trading platform with roots in the UK and available in 40+ countries (that should count as global), the process of depositing and withdrawing Naira involves vouchers issued by the third party.

By taking this route, you are also taking the risk of not just the exchange making away with your money, but also the voucher issuer fleecing both you and the exchange.

Binance Spot offers another workaround – you can first buy stablecoin USDT with NGN (see the chart below, we will need it later) and then sell USDT for BTC.

Or you can simply go to Binance P2P instead and get done with that.

There you can trade Naira for Bitcoin directly, and given that the price on both platforms is essentially the same (if we calculate the cross rate on Binance Spot) and that they are largely the same Binance under the hood, P2P becomes a preferred choice unless you need an orderbook no matter what.

When it comes to trading crypto for Naira, the same reasoning applies to the very choice between centralized exchanges and P2P marketplaces, with the latter being in no way affected by the cryptocurrency ban effective in Nigeria.

Ironically, they are only better off overall due to less competition from traditional exchanges.

As a consequence, in addition to an inherent edge that P2P trading platforms have over their orderbook-based rivals, there are also advantages that are determined by concrete circumstances, like the ones currently existing in Nigeria.

It is not then surprising that P2P marketplaces enjoy the reputation of being a safe and secure way to buy crypto, in Nigeria and elsewhere. Indeed, just like traditional exchanges, they are not born equal – some are better than the others.

The good news is that we can tell you which are these.

5 Best P2P Marketplaces in Nigeria

Although P2P does protect you from scam operations as far as your fiat funds are concerned (these can’t be stolen by the marketplace), you still remain vulnerable to fraud and hacks in pretty much the same way as on traditional exchanges as long as you store your precious coins on a P2P marketplace (as in “not your keys, not your coins”).

Even when you buy cryptocurrency and immediately withdraw it, you are not invincible for a certain window.

That’s the reason why we should narrow our selection to only those P2P marketplaces that have been sticking around for some time and have already earned the trust of the global crypto community. This is not an insurance policy, either, but it’s still better than nothing.

So here’s the list of Top 5 P2P marketplaces which can arguably be considered the best and which offer the Naira option:

Binance P2P
LocalBitcoins
OKX P2P
ByBit P2P
Bitpapa

There are a number of established and trusted exchanges which support P2P trading for Naira and are not included in this list. However, due to the almost complete lack of the NGN offers there, they can hardly be deemed as the best (or simply good, for that matter).

Seriously, if you can’t buy or sell USDT or BTC (the two most popular options), how can you know whether it is good or bad?

And neither can we.

Further, there are exchanges which go by the noble name of P2P while actually lacking the true spirit of peer-to-peer trading. For example, on Remitano, you can buy Bitcoin with Naira from other users (which counts as P2P), but you first need to deposit Naira to your Remitano wallet on this platform (which doesn’t). And if you sell BTC, you will receive NGN to your exchange wallet as well (which doesn’t count again).

These work more like traditional exchanges, and thus they are excluded too.

Given that the prices on the Top 5 P2P marketplaces are largely consistent with one another, while the payment methods that you can use there reflect the payment methods generally available in Nigeria, liquidity becomes the most important metric to consider. Liquidity refers to how much you can buy at a certain price for a given currency pair (for example, USDT:NGN).

With this in mind, let’s see what these worthy P2P marketplaces have got to offer us, which their advantages and disadvantages are, and how they fare against each other.

Binance P2P

Binance is believed to be the world’s largest cryptocurrency exchange by trading volume, and it’s not unreasonable to expect Binance P2P to maintain the reputation. Just like its spot cousin, Binance P2P allows you to trade a huge array of digital assets – you can trade both Bitcoin and USDT for NGN on this marketplace.

These are the Bitcoin prices in Naira as of right now:

The list of remaining offers which are not shown here goes for another 3 pages, and as the prices grow, so does the liquidity (as represented by the upper offer limit). The same is true with respect to USDT trading, which proves that Binance P2P is good in terms of how much you can actually trade there at reasonable prices.

LocalBitcoins

LocalBitcoins was the first P2P marketplace that became available to crypto traders, and it still rocks – well, at least, as long as you are interested in Bitcoin only:

There are fewer offers available compared with Binance P2P overall, but the liquidity is much higher for the same price range. It must be clear that LocalBitcoins is more popular among big-time traders, which is not in the least surprising for as dedicated and established an exchange as this.

But if you need anything other than Bitcoin, you are totally out of luck here.

OKX P2P

OKX (formerly OKeX) is mostly known for its spot market, but it also has a P2P marketplace where you can buy USDT and BTC with Naira. Actually, there’s only one offer to sell you BTC for Naira, so it is more about buying USDT with NGN on this marketplace.

And right now the USDT prices on OKX P2P are like these:

Liquidity is predictably rising with prices, but it is still not on par with either Binance P2P or LocalBitcoins (if we discard the fact that you can’t buy USDT on LocalBitcoins).

ByBit P2P

ByBit P2P follows in the footsteps of OKX P2P, there are no offers to buy or sell BTC for Naira. But unlike OKX P2P, it looks more like the BTC:NGN trading pair hasn't been enabled there at all, not like there’s simply no offers (no liquidity).

So it is all about USDT prices on ByBit P2P:

On the other hand, liquidity on this marketplace is plentiful – you can easily buy 1,000 USDT at prices below 800 NGN, which is consistent with the current price of 801.1 NGN on the Binance Spot market (see the chart in the previous section of this guide).

Bitpapa

Similar to LocalBitcoins, Bitpapa is dedicated to P2P trading, but unlike the former, which is a Bitcoin-only marketplace, in addition to the king of cryptos, you can also buy USDT, Ethereum, Toncoin and Monero on Bitpapa.=

You can trade Bitcoin there starting with the following prices:

Bitpapa’s NGN-to-BTC exchange rates are in line with those on Binance P2P and LocalBitcoins (give or take).

In terms of available liquidity, Bitpapa users are more inclined to trade Bitcoin for Naira, rather than USDT – this is in contrast to OKX P2P and ByBit P2P, which are apparently more USDT-centered.

No Limits

As it turns out, the distinctions between marketplaces go deeper than what simple differences in prices and liquidity levels would lead you to believe.

More specifically, within the BTC-USDT division and as far as buying crypto with Naira is concerned, some marketplaces (LocalBitcoins, Bitpapa) are more Bitcoin-oriented, while others (OKX P2P, ByBit P2P) are more about trading USDT, with Binance P2P being more of a universal marketplace.

As a practical matter, this distinction should be taken into consideration when deciding what marketplace to use for buying either USDT or BTC with Naira. Really, you would head over to ByBit P2P in the hope of buying Bitcoin there no more than you would rush to LocalBitcoins to buy USDT – neither trades both.

This is an extreme example (actually, two examples), of course, but it still shows the importance of making the right choice.

We could draw the distinction even further. Despite being the most universal marketplace (and one of the most liquid), you wouldn’t want to use Binance P2P if you wanted to avoid ID verification. This exchange (as well as LocalBitcoins, for the record) won’t let you trade until you complete identity verification.

And Binance has gotten famous for being paranoid in this department.

On the bright side, you can trade up to 10,000 US dollars in Naira on ByBit P2P before the identity verification requirement kicks in and stops you in the tracks. If you think this is a small amount, well, think again – for most other fiat currencies, it is a measly 1,000 USD or less.

So if you want to stay incognito, you can use ByBit P2P to buy USDT with Naira. And when you hit the so-called Accumulated Transaction Limit, you can switch to buying Bitcoin on Bitpapa, where you don’t need to verify your identity and there are no limits in place as to how much you can trade without verification (and from then on indefinitely).

FAQ

Q: Why P2P Exchanges Could Be the Future of Trading Values?

A: P2P doesn’t need trust between peers and only crypto is stored on the marketplace which provides escrow services (enforces the trade terms).

Q: Is P2P the Only Way to Buy Crypto?

A: No, you can also buy crypto on traditional, orderbook-based exchanges and with instant swap services.

Q: Is It Safe to Trade In P2P?

A: It is, as long as you use an established exchange or marketplace like the ones reviewed in this article.

Q: What is the Difference between P2P and OTC Crypto Exchanges?

A: P2P offers are public, while OTC (over-the-counter) ones, on the other hand, are private and brokered by the exchange as a personalized service.

Best P2P Crypto Exchange in Nigeria 2022 | Bitpapa

Related stories

Bitcoin Halving 2024

The Future of Blockchain: The Merger of Ethereum and Beyond

Unlocking the Power of Bitcoin with Credit Card Transactions