Key Highlights
- Cryptocurrency usage in Nigeria is rapidly increasing as a hedge against the depreciation of the national currency, the naira, and as a means of sending money abroad due to the difficulty of obtaining U.S. dollars and limited access to traditional banking services.
- Nigeria’s informal economy, which accounts for more than half of the country’s gross domestic product, has been hit hard by the scarcity of the naira and the resulting currency depreciation, with losses reported by poultry farmers and other small enterprises.
- MetaMask, one of the top cryptocurrency wallets, has expanded its offerings in Nigeria by allowing users to use instant bank transfers to buy cryptocurrency directly within the MetaMask mobile app and Portfolio Dapp, making it easier and more affordable for Nigerians to fund their self-custody wallets.
Cryptocurrency usage in Nigeria is rapidly increasing due to the naira scarcity and its declining value. Nigerians are exchanging more digital assets denominated in dollars as a hedge against the depreciation of their national currency, the naira. Data from Binance shows an uptick in P2P trading in the crypto market weaker aftermath of the CBN’s directive on limiting cash in circulationThe demand for a free, decentralized currency like Bitcoin has increased as the government removes all fiat currency from circulation.
In addition, the depreciation of the Naira in the black market has been blamed on rising currency demand that is outpacing bank supplies. The main reasons for the demand for foreign exchange are to pay for unmet demands such as tax debt, school expenses, and the import of manufacturing inputs.
Individuals, small enterprises, transportation companies, and farmers who depend on Nigeria’s informal economy—which, according to the International Monetary Fund, accounts for more than half of the country’s gross domestic product—have so far been the hardest hit. That is more than the GDP of Ukraine, or around $220 billion.
Poultry Farmers Association of Nigeria reported that its members lost over 15 million crates of eggs worth over N30 billion as a result of Naira scarcity.
A portion of the issue is due to the quasi-colonial payment system on the continent, in which over 80% of cross-border payments made by African banks are handled abroad, primarily in the U.S. or Europe. This results in increased expenditure and processing times that can occasionally be measured in weeks.
Nigerians are using cryptocurrencies for commercial transactions, to safeguard their savings as the naira depreciates, and to send money abroad because it is frequently difficult to obtain U.S. dollars.
Access to commercial bank branches is constrained, particularly for residents of remote and rural locations. There are also a few possibilities for online banking. Money may cease to have any meaning at all if extreme hyperinflation, pervasive government corruption, and capital regulations that lock up domestic funds in banks are added.
According to Ray Youssef, CEO of Paxful, “Normally, if someone wanted to transport money to the neighboring nation, you’d have to fill up a bag full of cash and move it over the border.”
Nigeria’s growth may be further hampered by the most recent disaster. The reason for this is that just 60% of Nigerian families have access to bank accounts, thus they mostly use cash for all economic transactions. At the same time, interest in the cryptocurrency market is still high.
All of these middlemen are eliminated by Bitcoin, enabling users to transmit digital payments to one another directly without using credit and without paying several settlement fees along the route.
Nigeria, one of meta mask’s top markets worldwide, ranked third in its mobile active users and was in the top ten nations in terms of website traffic over the past month.
With the help of MoonPay, etaMask, the self-custody wallet owned by ConsenSys, has expanded its offerings in Nigeria by enabling users to use instant bank transfers to buy cryptocurrency directly within the MetaMask mobile app and the Portfolio Dapp. This creates a more streamlined, effective, and affordable experience for users.
“We are collaborating with MetaMask to offer Nigerians Bank Transfers, an e-commerce payment method that is widely used in the country,” said Zeeshan Feroz, Chief Product & Strategy Officer of MoonPay. We anticipate that this integration will make it easier for Nigerians to fund their self-custody wallets.
ConsenSys claims that purchasing and selling cryptocurrencies can be difficult in Nigeria, with an estimated 90% of attempts to buy cryptocurrencies using credit or debit cards failing.
With about 12.4 million buyers or 5.7% of the country’s total population, Nigeria is now one of metamask’s top markets worldwide, coming in third in terms of mobile active users.
