There are few things as frustrating as losing money. What makes the situation even more aggravating is when the money gets lost by itself without you having done anything that would have resulted in such loss. The process that leads to such an unpleasant situation is called depreciation. This economic phenomenon is based on a rather complicated series of mechanisms that result in the decrease of the currency’s exchange rate relative to other currencies. The reasons for depreciation are many and include political instability, inflation, interest rate differentials, overall economic stagnation, and many others. Combined, these factors reduce the investment climate’s attractiveness inside the country and the inflow of funds.
Nigerian citizens use Nairas – the national currency, which has lost over 300% in value over the last few years. The reasons were many – including national strife, the coronavirus pandemic, the global economic and financial crises, and many others. Combined, the effect is that cryptocurrencies are slowly becoming the dominant form of settlement in Nigeria. The BTC to NGN exchange rate is constantly changing in favor of the former, since Bitcoin is the most coveted asset in Nigeria.
Apart from Bitcoin, such cryptocurrencies as LTC, Litecoin, and others are also popular in Nigeria, since few people want to keep Nairas at hand. The loss of value of the currency on an almost daily basis is the main reason why people are striving to buy cryptocurrencies. Other reasons include:
- High rate of cryptocurrency adoption in the country;
- High rate of internet penetration and availability;
- Large number of unbanked;
- Low entry threshold into cryptocurrencies.
Considering these factors, Nigerians are very inclined to buy cryptocurrencies instead of keeping their savings in Naira, which is not reliable. However, exchanging BTC to Naira is not the right way to go, since that would mean an instant loss of potential gains and the possibility of losing valuable assets to an unprofitable exchange.