More cryptocurrencies continue to be traded in Nigeria than almost anywhere else in the world, reflecting a loss of confidence in more traditional forms of investment.
Success stories have attracted millions of Nigerians to digital currencies, such as Bitcoin.
Revealed reconnaissance According to data platform Statista in 2020, 32 percent of Nigerians use cryptocurrencies, the highest of any country in the world.
It is estimated that Nigeria ranked third after the United States and Russia in 2020 among the top 10 countries in terms of trading volumes, generating more than $ 400 million in transactions.
Although Nigeria emerged from its second recession in less than five years, the difficult economic climate persists, making alternative sources of income and alternative currencies attractive.
The Central Bank of Nigeria reduced the value of the official currency by 24 percent over the past year, and there are fears of a further depreciation of up to 10 percent this year.
Meanwhile, prices continue to rise, with food price inflation rising to its highest level since July 2008.
And when Michael Ugwu, founder of a media company in Lagos, sold land he owned in 2018, he realized he needed to explore new investment opportunities.
Despite the increase in his profits in local currency, the price decreased compared to its value in US dollars due to the devaluation of the currency.
“I won in the local currency, but I lost in the US dollar, and then I realized that we were going back and started looking for Bitcoin,” Ojo said.
The move to invest in digital currencies paid off, and he won In some of his currencies 50 times what he invested, and Bitcoin has grown 10 times in the past year.
The former banker sees cryptocurrency as a development of finance, and despite the currency’s volatility, he sees Ojo is a valuable tool to hedge or reduce the risks of living in what it describes as a high-risk environment.
His wife started investing when she faced high commission fees to transfer funds between her Nigerian and British accounts.
And she said: It was not about making money, it was about how to have a better banking experience, and to save money in a currency that could preserve the value of money.
Despite their appeal, economists around the world warn that Bitcoin and other cryptocurrencies are high-risk investments.
And there are legitimate concerns that the appreciation of Bitcoin is a speculative bet that will someday leave many in misery.
It is a financial product with significant potential regulatory risks, and it has not been decided, ”says an international banker based in Nigeria Governments and central banks decide whether they can or should regulate them.
“I’m not quite sure on a technical level that the security you’re using is completely guaranteed, and I think there are still some technical uncertainties,” he says.
In an effort to regulate the market, the Central Bank of Nigeria banned banks from facilitating cryptocurrency-related transactions in 2017, but the ban remained largely unenforced.
The Central Bank of Nigeria issued a statement on February 7 stating the need to protect people and the country from potential threats posed by unknown and unregulated entities suitable for illegal activities.
And many investors say: They continue to trade using their offshore bank accounts, and they can Easily return to peer-to-peer transactions.
This means that instead of transferring money between a financial institution and an online cryptocurrency trading platform, investors transfer funds directly to one another or through an intermediary person while buying and selling.
And the cryptocurrency community in Nigeria used this method before developing the country’s virtual currency market ecosystem.
Nigerians see cryptocurrencies as a way to circumvent foreign currency restrictions, as there are so many restrictions on what can and cannot be done with foreign currency, and they find it easier to use the cryptocurrency as an investment tool.