As the price of bitcoin defiantly surges in the face of COVID-19 economic turmoil, investors are racing to secure a share of the boom in the U.S. and Europe. More countries around the world are also changing their rules to allow investment in the digital asset.
Hong Kong on Thursday issued its first-ever crypto license to OSL Digital Securities to commence cryptocurrency trading.
While many affluent countries are yet to embrace the digital coin, Nigeria, Africa’s largest economy surprisingly leads the way.
Bitcoin trading platform Paxful analyzed the coin’s transaction flow for the past five years (2015-2020), to find that Nigeria traded more than $566 million worth of bitcoin during the period. It thus becomes the world’s second largest peer-to-peer (P2P) bitcoin market after the U.S. which traded $3.75 billion in the same period.
Paxful’s analysis noted that Nigeria traded the equivalent of 60,215.7 BTC, a transaction record that puts it ahead of other countries apart from the United States with trade volume of 535,660.3 BTC.
Paxful’s co-founder and Chief Executive Officer Ray Yussef attributed the success to cross-border challenges that the West African country has been facing.
“Africa’s largest economy has problems and restrictions in sending and receiving money from inside and outside its borders,” he said.
Bitcoin transactions have given Nigerians a way out of the country’s tight money laundering laws. High volume money transfers are converted to bitcoin to evade government’s money laundering consequences, and there has been an increase in the use of bitcoin in everyday businesses in Nigeria.
Nigeria’s central bank keeps pushing policies to protect the naira from increasing dollar dominance. Some of these policies limit to the barest minimum, the amount of money a Nigerian bank card can dispense abroad or while using international POS.
As bitcoin becomes popular among Nigerians, the number of people who trade the digital currency for a living increases. Data from Coin Dance indicated a yearly increase of not less than 19% in bitcoin trade since 2015.
Nigeria’s highest volume of trade was recorded in 2020 during the lockdown when a 30% spike took place. Paxful said between January to September, it recorded a 137% increase in new registrations from Nigeria.
The popularity of bitcoin in Nigeria was also noted during the End SARS nationwide protests that the Nigerian government attempted to quell by restricting protesters’ access to financial services. To beat the hurdle, the innovative young minds quickly switched to bitcoin to receive donations. Bitcoin accounted for nearly $400,000 raised in donations.
In 2020 alone, more Nigerians have signed up to cryptocurrency trading platforms as it offers a path to earning a living and saves them from the regulatory bottlenecks that hinder financial transactions in Nigeria’s mainstream financial institutions.
“People want to be able to buy and sell, transact internationally and the more the traditional channels are being restricted the more people trade crypto and mainly bitcoin. And the best thing about it is that it’s almost impossible to stop. If you block the exchange it moves to peer-to-peer platforms that are non-custodial,” said Eleanya Eke, co-founder of BuyCoins Africa.
Other African countries like Kenya and Zimbabwe, who share common institutional financial challenges with Nigeria have also experienced an increase in bitcoin transactions, although they’re behind Nigeria in volume of trade.
International crypto exchange platforms like Binance, SouthXchange, Luno and Paxful are popular among Nigerians and so are local ones such as BuyCoins, Birrions and Quidax. There are also Telegram and WhatsApp based exchange platforms that have put bitcoin trading at the tip of people’s fingers.
The recent surge in bitcoin price has become another force driving the increase in the volume of the coin trade in Nigeria. As Wall Street investors rally around the digital asset, its growth is attracting the flotsam and jetsam.