This is why Nigeria is not a cryptocurrency hotspot

in HODL11 months ago (edited)


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Like most third world countries, Nigeria is suffering from a host of issues ranging from high poverty rate, low standard of living, insecurity and lots of other issues that will take us weeks to cover. Despite these issues, the country's latent potential, particularly with regards to cryptocurrency is very evident.

With an estimated population of over 200 million, the most populous country in Africa presents a viable marketplace and opportunity to push for even more crypto adoption. With such a high population, that accounts for roughly 14% of the entire continent, it is little wonder that unofficially at least, the country is somewhat ahead in crypto adoption.

A break down of Nigeria's population showed that the median age of the country is 18.1 years. Which means that the population is fundamentally young, and with a distinct rise in tech-savviness, the Subsaharan nation is a fertile ground for the development.

A quick look around the country's financial sector shows an increase in Fintech influence in the country. International and local companies like Paystack, Bundle, Opay and a couple of others have proved that there is hope for technology.

These Fintech companies have dramatically improved the financial sphere in the country and reduced emphasis on traditional banks. However, they're sadly limited by certain underlying challenges plaguing the country.

The interest in cryptocurrencies in Nigeria is borne out of a couple of reasons. One of it is that naira has been on a freefall since its creation, and so we want to secure our assets. The other is the potential of making extra through staking, mining, inflation etc. The point is that Nigerians are very active in cryptocurrency-related activities.

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Dollar to Naira exchange rate over the past years

A Chainanalysis report showed that Africa accounts for the least amount of cryptocurrency transaction in the world but it also showed that Nigeria accounted for the most volume. Yet, Seychelles republic has made giant strides in cryptocurrency adoption, but their roughly 97 000 population, pales in comparison to Nigeria.

So it is a bit ironic to find that the Island Nation are far ahead in the crypto race and is home to some top crypto exchanges that accounts that account for billions of dollars of trade.

Unlike Seychelles, where there's an enabling environment for the development of crypto-based companies, Nigeria has none of note. The central bank of Nigeria had previously published warnings in 2018 that indicated their passive view about cryptocurrency but in recent times, their view is more middle ground. However, the authorities offer minimal protection for people in the industry.

On the surface of it, considering the aforementioned large population/market, lack of regulations, and whatnot, Nigeria ought to be a hotbed for crypto companies, but alas, it isn't. In fact, other than crude oil, and this is with a bit more than a pinch of salt, I can't think of anything that Nigeria enables.

Despite having an extremely low cost of living due to the high poverty rate and such, companies will not be excited about building branches in Nigeria. To be completely honest, I can't blame them because there are numerous underlying that issues make the country a very unattractive place to set up shop.

The top of the list of problems is corruption. Corruption and related offences are commonplace in the government. When you combine that with the ridiculous "laws" that I can describe as arbitrary at best, companies that pride themselves in transparency and straightforwardness will generally have a hard time coping.

The government is also run on draconian policies that are based on the whims of whoever is in charge. They call it a democracy but in reality, we've been living under a dictatorship, because the very constitution that we base our rules on were designed by military heads of state in the past. This means that the government has a blank cheque to do as they please, offer zero accountability and basically, they can screw you over at any point if you don't play to their tune(read bribe).

Perhaps an offshoot of corruption, we also have the fact that basic amenities aren't readily available. I mean, yeah, there are places that have constant electricity and whatnot but they're the 1% and most likely the Government; you know, the ones that will kick you out. So, while crypto companies could technically cater to the large "unbanked" population, actually getting to them and providing the service will mean they run at a loss because, well, we lack the basic amenities like roads, electricity etc.

The other way crypto companies could squeeze into the market could be through offering payment solutions for businesses in the country. However, as Flutterwave learnt after simply allowing people to transact on their platform during a peaceful protest, you're never actually safe.

Due to these uncertainties, running a business, particularly one that has to do with cryptocurrencies is an even bigger risk. The fact that it is unregulated and has no protection, much like everything else in the country, means that you're constantly living on the edge.

For crypto holders like me living in Nigeria, there's always a cloud of uncertainty hovering above you. You live in constant fear of what might happen to your holding because there's really no laid down procedure for handling it. For now at least, cryptocurrency and government live in volatile peace, but all that could change if the wrong toe gets stepped on.

The young population have embraced cryptocurrency to a large extent but the older generation is still in control. This means that the powers that be only recognise "traditional" stores of value and will never in their lifetime accept a Decentralised protocol that spreads power. Forgive my digression.

The point is that if a cryptocurrency based business looks at this situation and thinks about the countless risks and looming danger to their business, they'll be taking a few steps back. This means that despite the country's potential, cryptocurrency businesses will not be excited about establishing physical operational bases in the country.

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Very good reflection about the actual criptopotential at your country.

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The United States is doing exactly the same thing. It is forcing companies to look elsewhere. Ripple is leaving the US and seeking another country for their headquarters. This follows a list of others like exchanges that fled the US borders.

It is up to individuals to embrace cryptocurrency and the hell with governments and companies. We can make our own way, given enough time and development. In the intern, each of us can position ourselves much better for wealth creation by filling our bags. The next bull run will make a lot of money for millions of average Janes and Joes.

The question is whether one is involved or not.

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The reason I like crypto companies is because the average person tends to trust them. Also, their large wallets provide a shit ton of liquidity and some level of guarantee for the average Joe and Jane.

Other than that, they're actually pretty good at onboarding the masses to crypto and because they're interested in lining their pocket, they will do plenty market. The knock on effect is that, while they bring people into their platform, along the line, there will be a certain number of people who will simply just want to go solo.

The next bull run can't come any sooner. In the meantime, I'm improving my position for it.

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Yes this is the "tragedy of the commons". Unfortunately in crypto we haven't done a good job of creating think tanks to deal with this. We often times just double down on approaches that will not work. For example..we often through a type of marketing gimmick speak about how cryptocurrency has the best use case in developing nations with collapsing banking systems and financial inaccessability.

We don't speak about how the people who need crypto the most are often times the people who it's not available for. So more than likely people are either too poor or unable to transition into crypto. So who are transitioning. Research has shown it's often times the richer people of the country exploiting arbitrage situations between their currencies. So again where the actual best " use case" is presented is in reality not how crypto is being used.

INstead of creating onboarding systems to address this. We continue to tell people to buy more untrusted and untested crypto. Stake more accumulate more. Unfortunately even in the richest nation in the world over 60% of the population in America doesn't even have $400 in the bank. It's only become worse during the global pandemic.

So what are the solutions? Well there are a few projects i see really meeting it head on or atleast have the blueprint to do so. Although not perfect Electroneum has done a good job of beginning to address the problem. They've first created easy wallet applications that are available on mobile devices that top up phone minutes and pay utilities in developing nations and have branded themselves fairly well.

The first 3 years of the project they airdropped coins to everyone. However it's not enough to just give money you have to create tradable economies. So they were able to establish gig worker economies that were able to take the labor and skills of people of developing nations and convert them to they cryptocurrency now globally traded. This working towards the solution. People in some of these lands were selling their phone minutes for bread. Now they can top up the minutes from their smart devices so its easier for poorer people to do everything from a mobile device with a easy ui. They don't need money just their skills as such and participation.

The next one is Bitcoin MYK, UBI. Basic income that stimulates the economy. So similar to Electroneum it provides a monthly ubi dividend and a gig worker economy as well. In order to convert skills into cryptocurrency. We're in a global pandemic. We're projected to go into a recession in 2021 by major economist.

It is a bit farfetched and unreasonable to believe that the average person is investing in cryptocurrency. So what we have again is rich traders stomping out the average person from being able to participate in the economy. It is unfortunate but this is the reality of the situation.

The question we're trying to answer. The problem we're trying to solve is. What systems will meet this challenge more efficiently and effective. You mentioned how the government controls many things in certain areas of the world in finance. Whether it be regulation against cryptocurrency that can be harmful. Yes governments can do that. They can take any good or value system outside of yourself. The one thing they can't take is "you". So in ubi projects like the ones i champion. You mint the coin. You mint the value. There is no external force that can take that away from you. There is no perception of value that can be manipulated away from you.

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Well says Mykos. I used electroneum in the not so distant past. Easy onboarding and easy mining experience. They rebranded but still retained the underlying simplicity.

Honestly, it is as you said about the system. There's always a huge gap to fill, especially in terms of financial education and consciousness. People who need these services are too busy trying to survive, that they don't even realise it exists.

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Na why we gats thread carefully. If they can see social media as a too for frauds just because they want to, what will they say about crypto.

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As in eh. I always wonder which day one idiot in government head will spark and just decide to fuck things up

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Excellent article. There is no replacement for getting news from the horse's mouth. As you are a Nigerian, who actually lives in the Country; I will trust your assessment more than some global news source.

It is a shame that there is so much corruption among the leadership of your Nation and many other confederations. Materialism is such a sad trend that has seized the world culture at different levels. Some use their riches in benevolent pursuits, while others extort from the impoverished and disenfranchised.

I do hope this inclination towards greed takes a turn towards benevolence. Not only in Nigeria but everywhere.

Excellent article with great insights. You are a credit to all investigative journalists from your Nation and Leo Finance as a whole! Thank you for a wonderful and interesting evaluation!

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Hey @belemo! In Mexico, we have a similar scenario. Young folks are enthusiastic about crypto, while older people are very skeptical. The other day I was talking with the guy that comes to clean my pool and even though he is not very old in age, he is about 43 years old, he does not believe in crypto, he still thinks that it's better to save the money below the mattress...

My goal is to help bring more people to cryto, my parents do believe in me because they have seen good results, but they have not invested yet.

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I like to tell more people about the potential of crypto as well. Funny thing is that it is the same with my parents.

They know there's potential in crypto because of me but they've not brought themselves to buy into the market yet

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Maybe I can convince my mom, we are selling a house and one of the goals is to invest, I'll invest most of my part, and she told me the other day she could invest part of hers, let's see if I can convince her.

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Nice idea man. I'll try to do something similar when I visit home this holiday. The only challenge is teaching her about keys and how wallets work. Once she has that part on lockdown, everything will be easy sailing

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I will argue that crypto adoption is gaining momentum in Nigeria. It's left for the bug fintech companies to adopt. Crypto certainly will not be supported by the central bank of Nigeria. It is disruptive and the system doesn't want anything disruptive. Fundamentally, crypto is here to stay but the time they realise it will be too late.

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Fair point. Nigeria has the largest trade volume in Africa but that is derived from international businesses KYC data, rather than from businesess running in the country.

My view is that, while the people have embraced itz the Government and powers that be have taken a middle ground of sorts, and if you add that to the uncertainty revolving around everything in the country, it becomes an unfavorable place to establish a crypto based business.

Compare that to Seychelles where there are specific guidelines and rules set up by the government to protect these sort of businesses. In Nigeria, it is still a jungle and that means bad for business

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I will argue that crypto adoption is gaining momentum in Nigeria.

I hope this is the case and would love to see thousands of Nigerians on Hive and the other applications. It is something that would certainly help, I believe.

We need to target the "rich environments", areas with people who are in need of an alternative. Cryptocurency can offer that. Rich obviously does not mean wealth but, rather, those who are willing to get involved in something different...a powerful target market.

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unfortunately, there are many get-rich schemes disguised as cryptocurrency in Nigeria which has given a lot of people a wrong notion of what cryptocurrency is about.
I have invited a few friends here but they always get lost and lose interest. Hive can be a handful. For me, it is important that they know the technology exist. That knowledge will come in handle soon. With the government pushing to regulation social media activities in Nigeria, it is only a matter of time before people start pushing for decentralised solutions like hive. I talk about this briefly in my last 3speak vlog

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Hive is rather difficult to get use to but it is easier than a life of misery.

Promoting one of the DApps is a much easier sell. Such as having people come here to do vlogs on 3Speak. That is an easier sell than trying to get them to understand all the tentacles of Hive.

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... but it is easier than a life of misery.

The people in that situation can not afford mobile data. They’re not connected and when their mobile phone is probably generations old and may not be able to run wallets. Which is a reason why I love Hive (although it is VERY data intensive).

One error many people in crypto make (at least some years ago because the topic is less common nowadays): to include the unbanked you have to talk TO the unbanked. Not talk about them because you don’t know their problems otherwise.

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They will be hesitant to do so without regulatory framework.

Coins.ph was very early to the game and within its first months had launched in both the Philippines (its home base) and Vietnam. Only some months after being in Vietnam the country decided against crypto - ironic because Vietnam is host to thousands of solid blockchain engineers — and Coins had to pack up. Pretty much over night.

Of course, while trying to raise funding that totally ruined their numbers. In fact, they couldn’t raise international funding until the Philippines had created a holistic approving framework (third world/developing nation so everything depends on central licensing).

They are expanding internationally again, but only in countries where there is actual legal approval and they can get licensed. All that pretty much totally ruined their early entry in the market benefit.

And to expand aggressively, and reach a wide population, lots of money (read funding) is needed because user acquisition is expensive. Even worse so if telcos are the usual Goliaths who will eventually enter the market to flex the smaller one out. Even if that means merger & acquisition.

Without a legal approving framework it is VERY risky for any startup.

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I do get your point. We've seen businesses in this part crumble due to lack of proper regulatory framework. Go-okada was one of such businesses that lost millions this year after the ban on motorcycles in major cities in Nigeria.

However, I will like to see more local inclusive or should I say participation esp amongst the heavyweights companies in the Nigerian market. Everyone acts like crypto doesn't exist when in fact it is thriving. I bet if proper research is done it will show it contributes significantly to our GDP.

Infrastructure wise, Nigeria might not be the ideal location for crypto miners because of the poor electricity and cost of doing business. However, Fintech is growing in Nigeria and I believe crypto should go with the trend. Like you said proper regulatory framework is needed esp to protect local crypto businesses.

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It will happen like it happens here in South East Asia.

The new fintech startups will expand their mobile wallets. When they are good with the telco (I bet you huys have millions of mobile payments every day via SMS), and the gov seems favorable, they will include the first few cryptoes in the mobile wallet (BTC, ETH, and probably XRP because of Western Union).

As the Gov sees there's no huge issue with those, they will be lobbied for a holistic regulatory framework. With potentially more international funding coming in as "bait". Then one will eventually launch an exchange.

That's how it went here. Now we have more than 10 million local crypto wallets but majority are used just as mobile payment wallet. But he sector has been legalized. A part of it, of course, being a development nation the legal part is not always helpful either. But it's a start.

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That's a great analysis! Sadly, most people from third world countries can't afford to buy crypto. Luckily, we can earn some while writing on Leo!

Keep on rocking!

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That is true, they cannot afford to buy crypto but they can get involved with writing, upvoting, and gaming. All of those are offered on Hive, whereby people can start to build some wealth without having to use any fiat.

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Thank God for that brother.

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Awesome post, man! I read it from A to Z... Politicians will come and go... They make a mess, and then other come and make an even worse mess... But, lets keep that on side...

I was thinking about countries wil low wages (like Nigeria), and cryptourrencies could make a play a very important role in empowering ordinary people... The possibility to earn by bribing a politician is a big advantage, and I really hope that more adoption of crypto will make a big difference in coutries like Nigeria!

Keep on creating and educating young people about the crypto possibilities!



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Love the gif by the way 😄

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I don't know much about Nigeria but that good thing they are adopting crypto there in my country they fucking bane it

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What country is that?

Pakistan!

I get what you trying to say in your post. Have very little experience with Nigeria, but some. At one stage I had two customers in Lagos, MTN and Globacom. Interesting it was when visiting them in their offices on Victoria Island. This is already some time ago, kinda 10 to 15 years ago I think? I saw a lot of cash transactions back then. I would have though, crypto would be popular in Nigeria. One dont really need businesses to handle crypto. Why not use eg HIVE accounts to pay for services? When purchasing products from the street stalls? I would imagine the seller is happy to receive some crypto. Or am I now a bit in dreamland?

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Found your post after you promoted it, very cool how much did it cost you to buy a spot on trending? I do think NG volume is also very centralised, what I've seen is some "companies" using BTC to settle imports like cars because some countries are not keen on accepting the Naira for imports but these are small orders.

I think the landscape in Nigeria is weird because you have a tech scene I mean whats that payment company that was bought by Stripe recently? Can't remember but it was for 200mil so If people are willing to invest like that, surly crypto would be a good avenue too

I think NG BTC traffic is also people who have been banned from PayPal for scams lol I don't think while that old generation are in positions of power that they are going to let things they cant control come in without a fight, they stubborn dictators, same here

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I spent 5 Leo to promote the article.

The name of the company is paystack I think. The older generation are stuck on bullshit. They're so proud of being dictators and then deceive themselves that it is discipline. Hopefully they'll die out soon and life will be better

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Not too bad so it's around a $1 to get onto trending, pretty cheap for now, in the future could cost you a pretty penny. Yes that's the one, much respect to those dudes, doing it big.

For me, when I look at what's going on here, I don't see even the old generation dying helping as much in the public/government sector, since that's not where the smart people go, the smart people go into the private sector, the corrupt shitty intellectuals who know they can't compete in the job market run to government.

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So it is consistent everywhere then? Con men in office

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Curious where Romania's sitting on that Chainanalysis rank, but I doubt it's rocking high hierarchy. There's not much development regarding crypto, but there are a few exchanges and ATMs around the country, people have heard about crypto, mostly internet geeks, and from what I know there is a project involving predicting earthquakes and blockchain that's pure Romanian stuff.

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You have to sign up for the app and use it online to find out. It sounds like Romania is way ahead in terms of use-case.
Around here, we have a few unofficial companies that operate outside the confines of financial institutions. Naturally, they don't do public offerings because they're not covered or have any document that permits them. However, they are easy onboarding portal for people that want to buy bitcoin, ethereum and the rest

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The Median age of 18 has me thinking Nigeria is a future powerhouse. I hope I am right.

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