Nigeria is currently at the forefront of cryptocurrency adoption in all of Africa, with the adoption rating standing at over 40% in the country – higher than that of traditional banking. Such a degree of penetration can be explained by the fact that over 27% of the country’s population own cryptocurrencies and are using them for making transactions ranging from retail for groceries to business-to-business. Bitcoin trading volumes on Nigerian exchanges have exceeded the $5.4 billion market by the end of 2022, making the country one of the most active Bitcoin trading venues on the planet.
The reasons for such high penetration of cryptocurrencies into Nigeria can be explained by the economic factors dominating the country’s landscape. The country’s economy grew by 3.6% in 2021, which followed a considerable slump in 2020 – the year that hammered the country in the period of the Covid-19 lockdowns. Though the country did manage to reduce its fiscal deficit to 4.8%, inflation values remain extremely high, averaging at around 17% throughout 2021 and even higher in 2022. The considerable decrease in oil production as a result of the global financial and energy crisis hit the country’s economy severely, making it difficult for the central bank to maintain the fiscal balance and forcing it to reduce spending on some key sectors of the economy.
Combined, the factors that had been undermining the economy of the country contributed to the rise in the main aspect leading to the growing adoption of cryptocurrencies in the country – the depreciation of the national currency. With the policy rate kept at 11.5% by the central bank of the country, the poverty and unemployment rates remained just as high, standing at a staggering 40% and 33% respectively throughout 2020 and growing worse into 2022.
The outlooks for the economy of the country for the coming year are far from encouraging, considering that inflation is expected to elevate in light of the global economic and financial crises, and the fact that oil exports are dwindling in light of the decision of the OPEC and the ongoing conflict in Eastern Europe. With such economic factors in play, the national naira fiat currency is experiencing depreciation in the double digit figures. Statistics indicate that the naira has depreciated by 25% within the span of less than a year, from December of 2021 to October of 2022. Overall, the national currency has lost over 200% in value over the last seven years, making it one of the worst performing national currencies in the world.
Considering such poor performance and the low reliability of the nation’s population towards the currency, it is unsurprising that Nigerians are looking for alternative currencies capable of fulfilling their needs as a means of value saving and transacting. Cryptocurrencies are increasingly becoming the means of choice for Nigerians, who are not only transacting using digital currencies inside the country, but also with partners in other African nations and abroad.
With such great emphasis placed on cryptocurrencies in Nigeria, it is unsurprising that a vast number of trading platforms have emerged that are offering Nigerians the chance to purchase, sell, exchange and transfer their digital assets both inside the country and to other users around the world. As such, a whole list of the best Bitcoin trading platforms has been formulated for African users, all based on a number of critical factors that should be taken into account when selecting which venue would best suit which type of user and their preferences.
How to Trade Bitcoin in Nigeria The Right Way
Trading Bitcoin and any other popular cryptocurrency involves a high degree of risk. Cryptocurrencies are inherently volatile and subject to numerous factors that influence their prices. Just as the Nigerian economy was hammered by circumstances on the global financial and political arenas, so too have cryptocurrencies been subjected to pummeling blows from events within the decentralized industry. The collapse of the Terra/Luna ecosystem, the catastrophe with the fraud of such exchanges as FTX and AAX, have all reduced cryptocurrency prices considerably and led to a depreciation of the overall market capitalization to a two-year minimum.
These exchanges, as previous market leaders, have proven that users are the sole holders of their assets and the responsibility for their safety resides on their shoulders. Having a personal wallet is the only way for ensuring the security of funds. Using Binance or any other centralized exchange is now a considerable risk, as many users are afraid of the custodial means of storing assets on such platforms.
However, millions of Nigerian users are only just starting to tap into the intricacies of cryptocurrency market trading and have yet to choose a platform from the top rated ones, or opt for a smaller, but more convenient solution. The first thing that many users do when they learn about cryptocurrencies is search the “What is Bitcoin” query in search engines. The results surprise them many times, but generally do not provide a sufficiently clear picture of the risks involved not only with trading of cryptocurrencies, but also with holding and trading them on various platforms.
The only way to keep your Bitcoin safe is to keep it on a non-custodial wallet like MetaMask, which is a browser extension, or in other wallets that do not require the user to submit their private keys into the custody of third parties like exchanges. The collapse of the FTX exchange was the result of user trust on a massive level that the exchange’s management abused by appropriating the users’ funds while lying about the availability of reserves. The same scheme is always at play when it comes to exchange collapses, since the lack of accountability and transparency regarding exchanges and their financial positions is commonplace.
The way you can secure your Bitcoin and ensuing operations with them is by first researching the market and realizing which platforms best suit the needs that each individual user has. Trading is a high-risk endeavor that must not be taken lightly, as it bears the significant chance of losing funds. Bitcoin is an expensive asset that few Nigerians can afford, therefore many of the country’s crypto market participants resort to less expensive digital currencies like Ethereum, Tether and other coins.
The first and most important factor when trading Bitcoin is, as mentioned earlier – security. The security of an exchange platform is ensured by its internal security layers that protect it from hacker attacks. The user side is protected by 2-Factor Authentication via email, SMS and Google Authenticator, which places the burden of verification on the user. The device the user holds is the key to their exchange account. The latter is the main point of vulnerability, since exchange wallets are often hacked and the funds stored therein do not belong to the users, but the custodial platform – the exchange itself.
As such, in light of the recent collapses of centralized exchanges, it is vital for users to select exchanges that give them the opportunity to connect non-custodial wallets. This will allow users to connect their personal wallets to the exchange instead of relying on the ones provided by the platforms. Such a measure will give an added measure of security and help keep the users’ assets safe from potential hacks of centralized exchanges or their bankruptcies.
Another crucial factor that has to be taken into account when selecting a trading platform for Bitcoin operations is the convenience of the exchange interface. Users in Nigeria are largely unbanked who have not had the opportunity to interact with banking applications. As such, selecting a platform that is extremely comprehensive and straightforward is vital. Binance and platforms like KuCoin are largely designed for experienced users who are not afraid of tackling convoluted and cluttered interfaces that contain multiple buttons. Such complexity can easily detract users from Nigeria who are not tech-savvy or have not had any previous experience with exchanges. As such, selecting a platform that offers easy onboarding and a very clear interface is vital to ensure one-click access to the facilities that users need, namely – purchase, exchange, sale, and transfers.
After the convenience factor comes the commission fee, which is an essential component of any cryptocurrency operation. The average transaction fee is 2%, which is considerable if many operations are made routinely. Some platforms like Binance allow their users to halve the commission through the use of native tokens. However, such assets are often expensive and detract valuable funds from the users’ portfolios. Some platforms have fixed feeds for transfers, making the operation unfair if the amount in question is small, as is the case with retail operations. With such factors at play, users must select a cryptocurrency trading platform that has dynamic feeds that are both small and suitable for making operations of the size that the user intends to have.
Lastly, users must take into account the availability of assets on the exchange’s list. If Bitcoin is the main asset users will be operating with, then there should be no problems, since most platforms support it as the default asset. However, not all exchanges support Tether USDT and other stablecoins that many Nigerians prefer as a means of transacting and value storage. Analyzing the list of supported assets is vital before opening an account on an exchange.
Key Takeaways
Nigeria is becoming one of the leading nations in terms of Bitcoin adoption and is giving local citizens the possibility and opportunity to invest in digital currencies for making everyday transactions. Such growing popularity of cryptocurrencies is opening the way for the use of multiple trading venues. The choice Nigerians need to make with regards to the platform they will be using for trading will depend on a number of factors, such as security, reliability, convenience, and commission sizes.
