Why is Bitcoin exploding in Nigeria?

In March 2020, the Nigerian government banned exporters from earning quick foreign exchange earnings, and Moses Awa suddenly found himself in a difficult position. His company has struggled with domestic trade for many years exporting sandals from Guangzhou, China and selling them in the northern city of Kano and its capital Abia, and now this evil restriction has brought Ava to the brink. . Cliff. “It's a big deal and we have to act quickly,” Ava said.

Ava sees her younger brother, Ossi, who started buying Bitcoin in 2019. “He kept bitcoin and he thinks it will be a good investment for the future. the same thing. I could pay my bitcoin senders, and they are willing to accept it. "

Nigerian currency Eria, naira, depreciation and many Nigerian companies convert to Bitcoin for payment.

According to data from blockchain research firm Chainalysis, Nigeria is now the second largest Bitcoin market in the world after the United States. In July of this year alone, the value of cryptocurrencies will be traded by Nigerian users for more than $ 2.4 billion, and many analyst users will not be able to follow behind the large anonymous companies.

One of the factors has led to the growth of cryptocurrencies in Nigeria, from austerity measures to continued inflation. The government banned cryptocurrency trading at licensed banks in February of this year. At the end of July, another state regulating digital currencies announced a crackdown on those who wanted to use cryptocurrencies illegally.

Nigerian traders see Bitcoin as a lifeline. Source: Temirad Adraha / Reuters

However, these measures have no impact on the market and the exchanges have reported that the volume of cryptocurrency trading continues this year.

Nigeria is one of the youngest countries in the world to know about digital financial services. But at the same time, the roots of poverty are broad and fraudulent, and pyramid schemes are endemic.

For many people, forex trading is an integral part of their daily life. In 2020, Nigerians sent more than $ 17 billion in funds from Nigerians working abroad. At the same time, currencies have also played a role in asset conservation, and the exchange rate of the Nigerian national currency, the Naira, against the US dollar has fallen almost 30% a few years ago. While the government has imposed restrictions on foreign exchange, the primary function of preserving and protecting assets is cryptocurrency.

Important events also play a role. Many people think that cryptocurrencies are important against government oppression.

In October, Nigeria experienced its biggest uprising in decades. Tens of thousands of people unleashed the brutal SARS police. They shot and killed 12 innocent people during the Lekki rally.

The "EndSars" attack was stopped by police and more than 50 protesters were killed as they used water cannons and tear gas canisters against large protesters to strike.

Demonstrations against police violence in Nigeria. Source: Reuters

Government repression is also financial, and civil society, protest groups and individuals who support protesters and fundraise for protests immediately see their bank accounts frozen.

The Feminist Coalition is a coalition organization that provides medical care and food to protesters.

Twitter founder and best-known cryptocurrency broadcaster Jack Dorsey also reactivated the Feminist Movement's Bitcoin fundraiser on his own Twitter account, which angered the Nigerian government and then tweeted on Twitter. Nigeria.

The “End Sas” attack is like a catalyst. This situation has caused fear among the public, and people have decided to exempt government agencies and organizations because they fear the police will make financial decisions immediately. Many organizations in Nigeria now have multiple currencies in cryptocurrencies.

To avoid police retaliation, a representative of a civil society organization said on condition of anonymity that its group bank was closed in October last year and that cryptocurrency is the only guarantee. against bad government interference.

"We moved all of our assets into cryptocurrency. It turned out to be a decision. Now the government has decided for us, but we can still pay each other money and keep operating," he said. -he declares. .

In February of this year, the Nigerian financial institution decided to ban all banks from shutting down users involved in the cryptocurrency business, and financial institutions were fined.

The ban began to impact the cryptocurrency market as many consumers relied on businesses to support transactions from buyers and sellers. But after a while more and more consumers are looking for a solution.

A large number of companies have come to the field and many Nigerians are doing business anonymously in the retail market. Several of the store's business groups have appeared in social software such as Telegram and WhatsApp, and people have traded directly with each other in group chats. These functions are outside the control body.

The trading platform has also been restructured and some cryptocurrencies have changed their names. As long as the word cryptocurrency does not appear on the business page, it can continue to function.

The government crackdown has not only slowed down the cryptocurrency market, but has also spurred public demand for cryptocurrencies. According to data released by LocalBitcoins, in the first five months of 2021, the volume of cryptocurrency transactions in Nigeria increased by 50% compared to the same period last year.

The Nigerian government is increasingly aware that cryptocurrencies cannot be abandoned, a model over which they have no control. What a terrible thing if they weren't used to doing this job.