Despite being unregulated in Nigeria, Bitcoin and other cryptocurrencies have managed to thrive within the country. According to a survey done by Statista on crypto ownership, 1 in 3 Nigerians reported having used or owned cryptocurrencies in 2020. On a global scale, Nigeria also consists of the second country with the highest Bitcoin trading volume, after the US. For countries like Nigeria, where poverty is still imminent, Bitcoin provides a cheaper means to transact. For many, trading cryptocurrencies on a daily basis is a lifestyle.
Crypto is a lifestyle for Nigerians
In Nigeria, the government’s ban on cryptocurrencies did nothing to slow the rising popularity of the digital asset class. Rather, the impact of banning banks from facilitating cryptocurrency transactions led many to rely on other platforms such as Whatsapp and Telegram to transact. The use cases of cryptocurrencies in Nigeria have continued to grow.
From remittances, cross-border transactions to commercial trades, cryptocurrencies like Bitcoin make it easier for Nigerians to send, receive, and store funds. Cryptocurrencies also enable funds to be sent at a cheaper cost in a near-instantaneous manner. It is therefore used daily by many Nigerians who rely on remittances to thrive.
Nigeria’s central bank digital currency, the e-naira
Despite the increasing popularity of digital assets in the region, Nigeria’s government issued a ban on cryptocurrencies, prohibiting banks from accepting or facilitating cryptocurrency transactions. To counter the growing use of cryptocurrencies in the region, it even launched a digital currency of its own, the e-naira. The e-naira, a digital version of the Nigerian Naira, is the second central bank digital currency (CBDC) to be deployed globally, after the Bahamas’ Sand Dollar. It was deployed by the Central Bank of Nigeria and comes as a response to the growing popularity of cryptocurrencies in the region.
However, the introduction of the e-naira did nothing to slow the growth of cryptocurrencies in the region. Chimezie Chuta, the founder and coordinator of Blockchain Nigeria User Group, explained to TechCrunch: “The concept of CBDCs has become a necessity for central banks. Money is a tool for controlling people. They do not want to allow the primary tool of control to be eroded because the entrance of privately issued cryptocurrencies like Bitcoin and Ethereum is a direct challenge to central banks’ authority everywhere in the world. CBDCs come in as their response, albeit weak ones.”
Currently, the e-naira can be used by anyone having a bank account, although the plan is to allow accessibility of use to anyone who has a phone number in the future. As the e-naira fails to onboard the unbanked – who by definition do not have access to traditional bank services – use case scenarios for cryptocurrencies have continued to grow unhindered in the region. Furthermore, many in Nigeria use cryptocurrencies instead of the e-naira as a safety net against political corruption.
Funding political movements with cryptocurrencies
Cryptocurrencies in Nigeria have also been used to fund protests. In 2020, Nigerians launched the “End Sars” protest against the Special Anti-Robbery Squad, condemning police brutality that had happened at the hands of the SARS unit. Many who supported the cause donated funds to provide first aid relief. Part of the money raised also went towards freeing the protesters that have been captured. When the government decided to freeze the bank accounts of protesters and support group members, cryptocurrencies were used as an alternative to fund the protest. Feminist Coalition, a group made up of 13 young women, managed to raise $150,000 in cryptocurrencies to support the “End Sars” protest. After their bank accounts were frozen, they opened a Bitcoin donation fund to continue supporting the demonstrations.
Monetary safe haven: Bitcoin
In times of economic and political instability, cryptocurrencies are becoming increasingly used to safeguard one’s wealth. In the case of Nigeria, cryptocurrencies have continued to gain traction, despite the introduction of the e-naira by the government. This is partly due to the population’s mistrust of the government. Subsequently, cryptocurrencies are used as a hedge against inflation and a protective measure against corruptive control.
Bitcoin, which has been regarded as a safe haven on many occasions, has been living up to its reputation. It has on more than one occasion been used to transact securely and conveniently, in a borderless and permissionless manner. This is the case for Nigeria, Myanmar, and now Ukraine. In today’s economic infrastructure, we are witnessing an influx of cryptocurrency use, as their decentralized nature has ultimately served as a solution during times of unrest. Whether cryptocurrencies hold the key to world peace still remains to be seen.