Crypto penetration in Nigeria is reaching impressive levels, topping 40% in 2022. The reasons for the fact that over 27% of the population of the country are crypto investors can be found in the state of the national economy. Nigeria is heavily reliant on its oil exports and the production of a limited variety of agricultural products. The nation’s economy was severely battered by the Covid-19 pandemic of 2020, which halted all production and forced the population to be locked indoors. The result was a catastrophic decline in employment rates and the ensuing impoverishment of the population, which was already reeling from the ongoing conflict with terrorist elements inside the country and the inflation rate that saw the depreciation of the national Naira currency by as much as 200% in under seven years.
Just as Nigeria was starting to recover its shattered economy and come to grips with the consequences of the pandemic, the global economy was suddenly shaken by the violent eruption of a war in Eastern Europe. The latter saw the unfurling of a smoldering conflict that had been ongoing for eight years and ultimately culminated with a financial crisis of global proportions. The ensuing series of illegal sanctions regimes and the contraction of production and vital exports battered the global economy and some countries that were entirely dependent on imports of such vital commodities as foodstuffs, various agricultural products, oil and gas, as well as many other raw materials.
Nigeria was impacted by the cascading effect of the contraction of oil production around the world and the impossibility of exporting its produce. The result was a series of fiscal and financial blows that further deteriorated the national economy and saw the local Naira currency lose as much as 25% in value over the span of just nine months. Though it would be fair to say that some currencies, like the Turkish lira, were no less affected by the global economic shrinkage in 2022, Nigeria’s precarious internal economy was more severely hit, considering the makeup of the population.
With exports from Nigeria falling and the influx of foreign currencies shrinking, locals had no desire to rely on the Naira as a means of transacting or store of value. The reasons are simple – the Naira is continuing its decline and losing purchasing value goes against the interests of the state and individuals. That is why Nigerians are increasingly turning to Bitcoin – the most popular cryptocurrency, as a means of value storage and transacting.
Cryptocurrency in Nigeria is now synonymous with investing. Indeed, Nigerian crypto investors are well-versed in the intricacies of the cryptocurrency market and know how to invest in proven assets. Bitcoin is certainly one of the most coveted assets on offer along with altcoins like Ethereum. The local retail and merchant system supports Ethereum as an acceptable means of transacting alongside other popular cryptocurrencies like Monero, Dash and Tron.
Nigerians can easily purchase Bitcoin through any app or website, of which there are many on the local market. In fact, Nigeria has become one of the leading venues for the sale and purchase of cryptocurrencies of every kind, considering that many of the apps operating on the local market have convenient mobile app services.
Ethereum buying or selling has become as natural a transaction for Nigerians as using their native Naira. The popularity of Ethereum in the country can be considered on par with Bitcoin. However, Bitcoin is still prohibitively expensive for the vast majority of Nigerians who do not even have bank accounts. The huge number of unbanked in the country, however, is not stopping locals from engaging in the cryptocurrency market.
The ease of accessibility of the cryptocurrency industry and the ease with which such assets can be transferred using a mobile app make the decentralized industry a preferable economic environment for many Nigerians. In order to buy crypto in Nigeria, all that is needed is to select a crypto exchange or exchanger service and set up an account.
Many local exchanges do not even require their users to pass through the Know Your Customer procedures that are customary for the vast majority of international trading platforms. The reason is simple – many Nigerians do not have documents at hand, but wish to partake in the cryptocurrency industry. The given factor allows the local economy to leverage micro-financial transactions that would have otherwise been impossible through banks with their many bureaucratic barriers.
Once users select a secure and convenient crypto exchange that suits their needs, they will have to open an account, which will give them access to an online wallet. With the wallet in place, users will have to top up their account balance using any of the supported fiat currencies. Most Nigerians prefer to use the Naira, since it is the most widely available currency. However, the United States Dollar is also popular among Nigerians. With the bank account or bank card connected, users can transfer the required amount to their exchange account and then conduct the purchase operation, having selected the cryptocurrency they wish to acquire.
The assets Nigerians store on their wallets are sooner or later used as means of transacting in retail or other operations. Considering the popularity of cryptocurrency transactions in Nigeria, it is not surprising that many foreign traders often resort to Nigerian exchanges in their trading transactions. Bitcoin can often be worth more on Nigerian exchanges than those in Japan because of the high demand for the cryptocurrency in the country. The same applies to other cryptocurrencies, making arbitrage strategies very applicable in Nigeria as a means of hedging profits.
Nigeria is a huge country with immense natural resource reserves. However, the local economy is extremely reliant on exports of raw materials, including oil. The ongoing civil conflict in the country is constantly disrupting the economy and the flow of resources, spreading fear and resulting in the depreciation of the local currency. With such realities, Nigerians are forced to turn to decentralized assets as a means of value storage and use cryptocurrencies for transactions. The vast possibilities for purchasing cryptocurrencies in the country make the process of acquiring digital assets both simple and convenient for many of the local unbanked and average citizens.