Nigerian crypto investors defy crackdown to ride bitcoin frenzy in 2021
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With savings of just under $ 80 and a salary of $ 50 a month, viralonline4u Promise Nwabueze, social media manager in Southeastern Nigeria, decided to invest everything she had in cryptocurrencies. The bet paid off. In months, viralonline4u her savings had increased fivefold. They have continued to increase since then.
Bitcoin experienced a similarly wild upswing in 2017
Currently, my total net worth is $ 2,500. Sorry to be so excited, viralonline4u but it’s amazing, she laughed, speaking on the phone from Benin City, where she was teaching a class on cryptocurrency trading. Now I am teaching so many people because the idea is to encourage in Nigeria.
Africa may have the smallest crypto market in the world, viralonline4u with just a 2 percent share of global trade, viralonline4u according to a 2020 report by US blockchain research firm Chainalysis. But, with the value of bitcoin in circulation just under $ 1 trillion and each bitcoin selling for around $ 50,000, it has the highest proportion of retail users transacting below $ 10,000, according to Chainalysis.
Some observers, including the Central Bank of Nigeria, viralonline4u have expressed concerns that inexperienced investors could lose their meager savings gambling on a highly speculative asset. Small retail and unsophisticated investors also face a high probability of loss due to the high volatility of the investments in recent times, the bank said, viralonline4u as it sought to clamp down on the trade.
Only to then plunge 80 percent from its peak. But Idayat Hassan, head of the Abuja-based Centre for Democracy and Development, viralonline4u said the crypto rally has been so strong that citizens are not concerned about the potential losses but instead the immediate gains they make because they are not losing.
There’s a sense of euphoria in part because it gives the young people hope and represents opportunities in a country where joblessness is rife, she said, noting that even her father was interested in trading cryptocurrencies. We are the poverty capital of the world, Nwabueze said, viralonline4u explaining the popularity of cryptocurrencies.
The economic strength of our country is not really encouraging — our GDP, our inflation, unemployment are on the rise, viralonline4u and the jobs that are available do not really pay enough to put food on your table. Nigerians turned to bitcoin when the government froze the bank accounts of leaders of the EndSARS protests against police brutality that swept the country last autumn. Supporters began donating to the cause using bitcoin, viralonline4u a practice that was encouraged by the likes of Twitter chief executive Jack Dorsey.
The frenzy for digital currencies prompted the central bank to reiterate the 2017 guidance prohibiting local banks from serving customers with crypto accounts. In a memo this month defending its decision, the bank argued that cryptocurrencies were prone to be used by criminals, viralonline4u drug traffickers, and terrorists. But the central bank’s message had the opposite effect that the CBN wanted it to have, said Ibukun Akinnawo, viralonline4u who hosts an investment club for most Nigerians 9–5 on the Clubhouse social media app and has invested in digital currencies. People now really wanted to talk about crypto.
In the wake of the crackdown
Nigerian merchants turned to peer-to-peer markets, viralonline4u which allow users to sell digital money to each other in exchange for real money or other digital currencies.
Yele Bademosi, the founder of Bundle, Nigerian crypto, and cash payments app, said that the volumes on his exchange remained high after the central bank ruling because people trusted the markets for their peers. He said that the CBN crackdown could push cryptocurrencies in the way of the Nigerian naira, the local currency in which there is a thriving black market. It will be much more like the current situation of the parallel market.
Victor Asemota, a longtime investor and leader of the Nigerian tech scene, attributed the demand for cryptocurrencies to CBN’s efforts to shore up the naira. These efforts have been criticized by the IMF and the World Bank. Officially, the naira is trading around 380 to the dollar, viralonline4u compared to 470 on the black or parallel market.
