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- Nigerians have doubled their embrace of crypto as volume hits $60 billion.
- This embrace is fueled by the devaluation of the local fiat currency, the Naira.
Despite the bear market faced by the broad cryptocurrency market globally, West African nation Nigeria has shown positive growth in the area of digital asset adoption and integration.
Nigeria’s adoption of crypto, especially Bitcoin (BTC) and United States dollar-pegged stablecoin Tether (USDT) has been on the rise, per data from blockchain analytics giant Chainalysis. In the last two years, the country, which is the most populous in Africa, has recorded up to a 9% increase in its rate of crypto adoption and usage.
Between August 2021 and July 2023, crypto exchanges in Nigeria documented stablecoin transactions worth up to $60 billion. The reported increase makes Nigeria one of the six nations where crypto transaction volume has seen a significant jump. While the rate of crypto usage in Nigeria may have risen surprisingly, it is safe to say that it is not without strong cause.
Nigerians Stablecoin Adoption Trigger: Naira Devaluation
Naira, the Nigerian local fiat currency has seen a recent dip that has caused it to lose up to 65% of its value against the U.S. dollar. According to Rume Ophi, executive secretary of the Stakeholders in Blockchain Technology Association of Nigeria, the Naira to dollar rate has been bad due to terrible economic policies.
To further explain his outlook on the Naira rate to the Dollar, he said in a statement
“Imagine buying USDT a few months back at 700 Naira per dollar, and today it is 1,220 Naira per dollar; That’s a 520 Naira spread. Apply this to $100,000 and that’s a lot of money.”
The sudden devaluation of the naira began in June when the Central Bank of Nigeria (CBN) decided to float the currency. Floating the currency means buyers and sellers in the foreign exchange market were allowed to quote prices of their choice. Prior to this time, the prevailing practice was that the CBN dictates the rate for the FX market.
The move led to a fallout and compounded the already volatile situation in the market. This left households and businesses in a deep struggle. However, a look at global crypto usage, shows that Nigerians have turned to cryptocurrency as an alternative for payment as well as a means to preserve their wealth amidst rising inflation. Bisola Asolo, the Chief Executive Officer (CEO) and co-founder of Web3.0 billing platform Super noted that stablecoins are “crypto’s killer application for the African continent.”
Bagging Industry Giant’s Support
Leading digital asset service provider Binance offers Nigerians easy access to these stablecoins and BTC. Markedly, the crypto exchange and Nigeria have an existing relationship despite the harsh regulations in the country. Binance and Nigeria Processing Zones Authority (NEPZA) are in collaboration to make the African country a digital hub “similar to the Dubai virtual free zone ”
Noteworthy, Nigerians have been faced with a number of financial limitations in recent times. Almost a year ago, CBN placed a restriction on the country’s daily and weekly fiat withdrawal limits after talks about banning cash withdrawals. The pivot towards stablecoins and BTC does not come as a surprise in light of these developments.
