Nigeria has one of the most thriving cryptocurrency communities in all of Africa – a consequence of the country’s economic state and the rampant unemployment sweeping across its predominantly young population. And though Nigeria has a high enough adoption index, it did not enter the top 10 of African countries in terms of cryptocurrency utilization. The predictions on this regard are more impressive, however, considering that analysts believe Nigeria will achieve full cryptocurrency adoption by the end of 2030. At present, however, Nigeria is unable to compete for the title of the leading nation in Africa in terms of crypto adoption, since it is reeling from the devaluation of its national Naira currency, a rampant inflation rate topping 25% annually, an ongoing internal conflict with breakaway factions and terrorist groups, as well as runaway economic degradation.
The predictions made by analysts concur that Nigeria will achieve 100% cryptocurrency adoption by the end of 2030, with its closest competitors being the Philippines with 84%, Thailand standing at just above 64%, followed by Malaysia with 61%, and finally India at just over 50%. Such statistics indicate that Nigeria is heading far in its cryptocurrency favorable environment, considering the fact that India already has over a third of all cryptocurrency users worldwide – just over 100 million people. Nigeria is still competing with Kenya for the top spot in Africa regarding crypto adoption, but there are several factors that are contributing to its rapid ascent up the charts.
The first and most important factor driving cryptocurrency adoption in Nigeria is the extremely high rate of poverty, which has topped a staggering 95 million of the country’s population in 2022. The statistics provided by the World Bank are dreary, showing that the main reason for such a gradual decline in the population’s incomes and purchasing power is the ongoing devaluation of the national Naira fiat currency. Hyperinflation is causing the cost of living to soar and the possibility of storing value in Naira to drop significantly on a monthly basis. As a result, cryptocurrencies are serving as an alternative means of both transacting and value storage for the local citizens.
The second major reason contributing to the rise in cryptocurrency adoption rates is the high level of unemployment in the country, which is reaching approximately 33% by the end of 2022. The reason for such catastrophic economic figures is the high degree of illiteracy in the country and the blatant unavailability of jobs in an economy that is highly reliant on its exports of oil and the agrarian level of production that excludes the possibility of industrialization in any foreseeable future. With such a reality, cryptocurrencies are opening up new jobs as projects, exchanges and other decentralized industry elements are setting up shop in the country and giving skilled Nigerians work opportunities. Many Nigerians are taking on the roles of crypto industry support personnel in community chats, as developers, traders, and even consultants on cryptocurrency matters. Many others have taken on jobs in writing articles for the industry, trading Non-Fungible Tokens, giving analysis of cryptocurrency rates, as well as providing marketing and other services.
The third and most important reason for the growing adoption of cryptocurrencies as a means of payment is remittances. Given the dropping value of the national Naira, Nigerians are turning to emigration in search for work abroad. For many, such jobs have become lifelines and the need to transfer funds back to families forces Nigerians to seek the most profitable ways of transferring funds while incurring the lowest commissions. The cryptocurrency industry offers some of the lowest rates if compared with banks and financial transfer services. Estimates place the total volume of remittances inside Sub-Saharan Africa at around $48 billion, and the figure is growing year-on-year with the ongoing decline in economic situations in Nigeria and neighboring countries as a consequence of the pandemic and the worsening global economic and financial crises.
Another important factor to note is the unfavorable policy adopted by Nigeria’s central bank regarding cryptocurrencies, which is undermining many citizens’ trust in both the national economy and cryptocurrencies. On the one hand, the unsound policies have continued worsening the financial and economic crises inside the country, and on the other, they have contributed to the increase in the volume of the shadow economy that is leveraging cryptocurrencies as the main form of payments.
With such realities, it is not difficult to envision how Nigerians view cryptocurrencies, considering that many of the coins traded inside the country are much more demanded and valuable than the local fiat currency. The ongoing devaluation of the local currency and the growing hyperinflation are forcing Nigerians to side with cryptocurrencies as a means of payment and to support the cryptocurrency industry in general as a source of both jobs and income opportunities.
If more statistics are to be considered, then it becomes evident just how deep cryptocurrency penetration goes inside the country. A recent report indicates that just 0.3% of Nigerians have invested their wealth into cryptocurrencies, while 25% have done so in equity shares and other assets. This means that Nigerians mostly use cryptocurrencies for transactions rather than as a means of value storage. This goes in line with the numbers, which indicate that as many as 10% of Nigerians are cryptocurrency investors, while as many as 40% of the population hold cryptocurrencies in one way or the other. In general, about 27 million Nigerians use cryptocurrencies on a daily basis and do so for making transactions on both the business and individual levels.
With such adoption rates in mind, it becomes clear that opening a crypto wallet is a matter of necessity for Nigerians seeking to engage in the cryptocurrency industry. A bank account will do little to help in this regard, since Nigerian banks do not accept cryptocurrencies and many citizens remain unbanked altogether. As such, the opportunities for creating a Bitcoin wallet or exchange wallet become open, and many avenues are available to Nigerians in this regard.
How to Set Up a Bitcoin Wallet in Nigeria
The Nigerian cryptocurrency market offers local citizens many opportunities to open up different types of cryptocurrency wallets. Among the most popular are exchange wallets, since many Nigerians engage in trading and are avid holders of altcoins that are traded on various platforms. Apart from exchange wallets, there is another type of wallet that locals prefer – the non-custodial one. The latter type involves higher security measures and places the burden of safety on the user by allowing the latter to retain their private keys. These wallets are considered to be more secure, since they cannot be hacked like exchanges and users are not at risk of losing their assets to a sudden mass attack.
In order to keep your Bitcoin safe, the first step is to set up a wallet and the choice of such begins with exploring the types of wallets available on the market. There are hundreds to choose from, many of which cater to Non-Fungible Tokens and act as perfect repositories for other crypto assets that are so popular in Nigeria. The choice of wallet starts with the understanding of what it will be used for. If the main purpose of the wallet is storing Bitcoin, then users should opt for a non-custodial wallet, since the risks involved in terms of losing assets to hacker attacks are quite high.
There are many non-custodial wallets available on the market, such as MetaMask, which offer users the opportunity to quickly undergo registration via email and take advantage of a broad list of supported assets. Many of the wallets are mobile applications and browser extensions that can be easily installed on any device and used on the go with just an Internet connection.
However, if users are intending on engaging in active trading and ongoing transfer operations, then the choice should fall on exchange wallets, or hot wallets. These applications are provided by various exchanges like Binance, KuCoin, and others. Most of them are very safe and secure, since the underlying platforms have good reputations and have vested considerably in the security protocols. Still, the chance of losing the funds stored on a hot wallet are quite high in light of the series of bankruptcies that have rocked the cryptocurrency exchange industry with the collapse of the FTX exchange, the downfall of AAX, Hoo, and others.
A major advantage of hot wallets is that they are constantly connected to the internet and do not require users to repeatedly enter them for making every transaction – a process that can be quite inconvenient and cumbersome. Exchange wallets also act as access keys to a variety of functions and services that the exchange provides. For example, KuCoin is a whole ecosystem of services with a broad range of opportunities that span from Non-Fungible Token showcases to trading venues and staking pools.
Key Takeaways
Nigeria is reeling from the pandemic, which has forced many businesses to close down and resulted in hyperinflation inside the country. The ongoing depreciation of the national currency, coupled with the rising rate of unemployment have sent the national economy into a dire state that is threatening not only the situation of the whole economy’s stability, but also individual households. As a result, Nigerians are increasingly turning to cryptocurrencies as an alternative to the fledgling Naira.
The growing rate of adoption comes hand in hand with the rise in the number of wallets being opened in decentralized space. Luckily, Nigerians have a broad range of options before them. Apart from exchange wallets for convenient operations with a long lineup of altcoins and Bitcoin, Nigerians can also open non-custodial wallets to keep their funds safe. This variety, and the many opportunities provided by the cryptocurrency industry as a whole, are giving hope that Nigeria can take a leading role in Africa as the main cryptocurrency adoption haven and give locals the necessary possibilities of entering a new financial reality.
