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  • Updated: May 06, 2022

Absence Of Suitable Financial Services: A Catalyst For Nigeria Crypto Ownership

The crypto industry is one that has experienced tremendous growth in recent times since the introduction of defi. As a result of solving some major defi setbacks, Defi 2.0 crypto will further encourage its use.

Although there is still a level of uncertainty and doubt, more and more countries are warming up to the use of cryptocurrency. Digital currencies have several advantages which set them apart from their fiat counterparts.

An advantage of cryptocurrency is the fact that it is not subject to third-party interference, which is not the case with fiat. Additionally, it is also relatively safer.

Recently, a survey was carried out among a group of investors based in the United Kingdom. The outcome revealed a higher percentage of them believe that investing in digital currencies is largely safer than investing in conventional assets like gold, properties, or stocks.

Africa is not left out in this rapidly developing cryptocurrency ecosystem as several African countries have recorded a cascade in the number of crypto investors in recent times.

Nigeria is one of such countries, which is officially regarded as the most populous country in Africa. 

There have been reports of a sudden spike in the number of cryptocurrency investors in the country and the reason cannot be farfetched.

Several factors encourage users to invest in crypto in different countries such as combating inflation, government acceptance of crypto, favourable policies, and market price amongst others.

However, in this case, the motivation behind the massive adoption of cryptocurrency in Nigeria amongst citizens stems from the lack of adequate financial services in the country.

Of course, this is not just speculation; the research was carried out by KuCoin, a crypto trade platform.

Current Growth of Cryptocurrency in Nigeria

Extensive research carried out by KuCoin has shown remarkable growth in the number of Nigerian investors in the crypto world. Numerous crypto assets are owned and traded daily by these Nigerian investors.

This development arose as a result of the difficulty of access to moderately priced financial fiat-related services. This is because these services have been overtaken by inflation, which makes it difficult for the average Nigerian to comfortably afford them.

The resulting effect is the widespread adoption of cryptocurrency assets across the country.

Going by the report, an approximate 34 million citizens in the age range of 18 and 60 either held or traded cryptocurrency or crypto assets within the previous 6 months.

This figure accounts for roughly 35% of the entire population of Nigeria.

Furthermore, about 17.4 million folks out of the above figure have converted well above fifty percent of their properties and assets into cryptocurrency.

These folks represent slightly more than half of the total number of active cryptocurrency investors across the country. 

The research reports went ahead to reveal that most of these Nigerian investors did not actually commence their path into crypto recently.

It was stated that only a mere 26% of these investors started their journey only six months ago.

This was found to be as a result of the massive Bull Run that Bitcoin experienced in 2021 which led to it passing the 69 thousand dollar threshold for a brief period.

Among the foremost rationales that make buyers invest in crypto globally rather than fiat is the alleviation of the effects of the lofty inflation levels of fiat.

Going by the report, the peer-to-peer trading technique is the most extensively employed method used by Nigerian investors to exchange fiat for cryptocurrency assets.

Additionally, the report predicted that within the space of six months about 70% of the current crypto investors will invest even more.

Going by this, the adoption of cryptocurrency in Nigeria will likely be doubled within the same time frame.

The State of Fiat in Nigeria

The official currency of Nigeria is known as the Naira. This currency has suffered a steady decline in recent times.

The Naira has experienced a drop in value by well over 209% within the space of only six years. This has led to high levels of inflation across the country.

This situation has also served as a catalyst enabling investors to consider large-scale investments in cryptocurrency assets such as Ethereum (ETH) and Bitcoin (BTC).

In the latter quarter of 2021, the current president of Nigeria, Muhammadu Buhari officially launched the e-Naira, Nigeria’s very own Central Bank Digital Currency (CBDC).

This news topped the charts of crypto news in Nigeria at the time. Several governments have made the move to employ CBDCs as digital variants of their national currency or fiat.

This digital replacement aims to serve the purpose of lowering the operational costs associated with fiat alongside enabling swift payment across borders.

Interestingly, going by the latest worldwide CBDC index list, Nigeria’s e-Naira was ranked the foremost and the most progressive CBDC.

This is coming after the currency made a record of 95 marks out of a total of 100 in the retail and wholesale sections respectively. This is a big win for the Nigerian digital currency.

Popular cryptocurrency exchange, Gemini, in April published a comprehensive article that validated the fact that a major boost in the number of crypto investors was recorded globally in 2021.

On top of the list of countries with the most number of crypto investors is Indonesia, followed by Brazil. U.A.E follows closely in the third position while Nigeria is currently at the sixth position, after Israel.

Cryptocurrency adoption also increased greatly in India (whose government officially made moves to adopt crypto as a legal tender), Hong Kong, and Brazil.

Concluding Thoughts

The cryptocurrency ecosystem is steadily growing day by day with the ever-increasing number of investors being recorded globally.

The spike in the number of cryptocurrency investors in Nigeria only seems to be the tip of the iceberg of what is to come. With the persistent downturn of the country’s fiat currency, the naira, it is predicted that even more people will rather invest in cryptocurrency assets than their fiat counterparts.

The crypto market is definitely on its way to a massive boom in Nigeria and we can’t wait to watch it all unfold.

The future of crypto adoption in Nigeria is even so bright, with the unveiling of defi 2.0 crypto. In the meantime, let’s keep our fingers crossed and hope for the best.

Financial services such as lending, borrowing, and loaning, are not yet available on Redot, but you can surely trade crypto assets from Redot.com.

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