How Nigeria Became the Second-Largest Bitcoin P2P Market in the World

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Nigeria is the world’s second-largest Bitcoin peer-to-peer market, according to recent information curated from CoinDance and published by Quartz. 

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The data gathered from leading peer-to-peer bitcoin exchange Paxful between May 2015 and November 2020 shows that the United States ranks first with a total trading volume of 535,660 BTC ($3.76B) within the period.

Nigeria takes the second position with a total of 60,215 BTC ($5П267M) traded within the last five years compared to third-place China with a volume of 20,553 BTC ($181M). This also makes Nigeria Africa’s largest Bitcoin market. 

Bitcoin P2P Trading Volumes. Source: Quartz

How It All Started 

Bitcoin started trending in Nigeria in 2016 because of the infamous MMM Ponzi scheme, which promised to pay investors 30% monthly return alongside other mouthwatering bonuses on fiat and bitcoin investments.

The scheme was launched in 2015 and described itself as a “mutual aid fund where ordinary people help each other,” mostly the unemployed in the country. According to reports, more than 2.5 million Nigerians were registered in the scheme by late 2016. 

In 2017, its operators pulled an exit scam, leaving a great many in financial ruins and debts. Other Bitcoin-related fraudulent schemes were launched, and some participants continue to lose money out of greed and ignorance, even to this day

However, despite the sad news for affected investors at the time, Nigerians didn’t hate bitcoin: after all, it was just a tool used to perpetrate the crime. In fact, MMM became a tipping point for Bitcoin in Nigeria. Since the MMM exit scam, the cryptocurrency has recorded tremendous growth in the country. It offers solace to Nigerians in a failing economy with a corrupt government. 

Bitcoin Offers Multiple Benefits To Nigerians

Bitcoin education has become more available than ever in the country. The youths and the tech-savvy citizens are tapping into every single benefit Bitcoin has to offer, from trading to cross-border money transfers and everything in between. 

Nigeria has the most robust economy in Africa, but its unemployment rate is one of the highest in the continent. Bitcoin trading has become a source of income for an increasing number of youths in the country, considering the asset’s performance since its inception. 

Nigerians have also struggled with sending and receiving payments from abroad, and the government recently imposed strict measures on dollar spending to defend the naira. 

Global payment processors like PayPal only allow their Nigerian customers to send funds abroad but not receive them. And more recently, TransferWise blacklisted Nigeria from its list of supported countries due to unfavorable policies from the country’s lawmakers. 

Existing payment options are inefficient, too expensive, take days, and require rigorous KYC requirements. It was a real struggle before Bitcoin came to the scene. A growing number of Nigerians who work online or have families in the diaspora now use Bitcoin and other cryptocurrencies for money transfers because they are cheaper and faster than traditional channels.

Nigerians also revere Bitcoin because of its censorship-resistance status. This value proposition was recently put to the test in the country during the October EndSARS protects against police brutality. 

During the protests, donations were made via the country’s fiat currency to fund protesters. At some point, the government moved to stop protesters from making fiat donations to end the protests. However, Nigerian youths quickly adopted Bitcoin and started making BTC donations. Reports at the time revealed that about $160,000 of the $400,000 donated was raised via BTC, which confirms that Bitcoin adoption is already here. 

Some Nigerians also use the leading crypto asset as a hedge against their failing economy and inflation as the country’s fiat currency continues to weaken against the USD. Reports confirmed that Nigeria’s inflation rate was 14.89% last month as food prices spiked to new highs.

The Most “Bitcoin” Trending Country

With Nigeria tagged as the second-largest Bitcoin market on P2P trading, the date from Google Trend confirmed that there is indeed an increasing interest in Bitcoin in the country.  

Google Trend Bitcoin Interest-min
Bitcoin Interest. Source: Google Trends

Nigeria ranks first in Google’s “Bitcoin” search results in November 2020 and since August 2018, as confirmed by Binance Research last year.

The continuous and steady increase of Google searches for Bitcoin in Nigeria is followed by a significant rise in sign-ups on crypto-related services like exchanges and wallets. 

For instance, Paxful said in October that it recorded a massive 137% increase in new registrations from Nigeria between January and September 2020. The P2P exchange now has over 600,000 Nigerian customers. 

Nigerians on Paxful use the platform for “peer-to-peer and arbitrage trading,” as well as remittances, according to Nena Nwachukwu, Paxful Nigeria regional manager.

Another report published by Blockchain.com also revealed that “Nigeria has been the most trending country in recent months,” with a 60% increase in Blockchain.com web wallet usage from Nigerians since the end of Q1 2020. 

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Nigeria is also leading Bitcoin’s adoption in Africa. Although other nations in the continent like South Africa and Kenya made it to the top 10 largest Bitcoin markets globally, Nigeria is no doubt far ahead of them. 

Nigerian youths learn new things quicker than their counterparts in other African countries. Andrew Ameh, a seasoned trader who empowers youths through crypto trading, explains:

Nigeria youths are somehow light years ahead of other youths around Africa when it comes to accepting new technology and knowing their way around it. I’ve had the privilege of meeting with some of them and I can tell you Nigerians learn these things easily.

It is this openness towards new things that makes Ponzi schemes and other scams thrive very well in Nigeria compared to other African nations, he added. 

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Ameh expects the Bitcoin trade volume from Nigeria to continue shooting up. The young population is beginning to see that other youths within the country are profiting from trading activities, so they would want to partake, especially now that the price of BTC is high.

“When bitcoin price rises this way, most Nigerians are always out there wanting to buy and asking ‘have you heard of bitcoin? Have you heard of this? They say it is now $24,000, $23,000 and it is the next big thing,” Ameh said, adding that “everyone wants their own fair share of the Bitcoin cake.” 

As more Nigerians continue to search for Bitcoin and join the crypto bandwagon, the country’s financial watchdog is looking to create a regulatory framework to protect investors and facilitate the industry’s growth. 

In September, the Nigeria Security and Exchange Commission released a proposed regulation for cryptocurrencies, saying it is well equipped to regulate digital assets. 

Meanwhile, Nigeria welcomed its first Bitcoin ATM this April, making it the eighth African country to own one. 

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