- According to reports, many citizens of Nigeria turned to alternative assets like bitcoin and stablecoins to protect their wealth after the naira’s devaluation.
- On the well-known P2P trading platform Paxful, Nigerians transacted more than $5 million worth of Bitcoin, and LocalBitcoins reported a 258 percent gain.
Many Nigerians are hoarding dollar-denominated digital assets, especially stablecoins and bitcoins, as a hedge against their country’s local currency collapsing, which has caused the naira, the country’s fiat currency, to drop to an all-time low on the black market.
Nigerians are in a panic due to the extremely volatile exchange rate between the Naira and the Dollar, with the Naira currently trading at N720 approx to the dollar on the black market.
Consider that the CBN had decided to bring legal action against anyone found buying dollars at any of the nation’s financial institutions. However, this has led many Nigerians to enter the cryptocurrency industry by gathering digital assets with a high dollar content as a hedge against the devaluation of the national currency (Naira).
The most popular digital assets, according to reports, are stablecoins and bitcoins. This has led to a record-breaking decline in the value of the local fiat currency, the naira, on the black market. Recent statistics show that Nigerians traded more than $5 million in Bitcoin on the well-known P2P trading platform. Pax full and local bitcoins increased by 258 percent from the prior week.
Even though banks are prohibited by the central bank from supporting cryptocurrency transactions, many Nigerians nonetheless exchange digital currency in the peer-to-peer market where transactions are priced in dollars.
“Focusing on Nigeria, trade volume exceeded $760 million last year, and the number of Nigerian users has surpassed two million. Furthermore, Paxful has seen that interest in peer-to-peer networks and bitcoin has not decreased despite the global financial crisis. Nigeria’s trade volume in the first half of 2022 reached about $400M, demonstrating the continued demand for bitcoin in emerging nations.
LocalBitcoins, a digital asset market, also noted a large increase in interest in the main cryptocurrency.
Since July, while the central bank seeks to promote trading through regulated exchange channels, the naira has been hitting new lows on the black market as a result of a lack of dollar supply.
However, Nigeria’s most recent addition of a blockchain-enabled trading platform planned for 2023 is a huge step forward for the cryptocurrency industry. The most recent development coincides with the issuance of regulatory rules for digital assets by the Nigerian Securities and Exchange Commission. The CEO of Nigeria Exchange, Temi Popoola, thinks that emerging and young Nigerians are interested in distributed ledger technology, and the exchange wants to investigate how it might use it to expand its market.