Emmanuel OchayiCryptocurrency Use Increases as Nigeria Faces Economic Pressure
Cryptocurrency usage in Nigeria is growing rapidly as the country battles a weakened currency and high inflation.
According to a new report from blockchain research firm Chainalysis, Nigeria has become the second-largest country globally in cryptocurrency adoption.
Join our WhatsApp ChannelThe firm’s report, released on Wednesday, states that Nigeria traded approximately $59 billion in cryptocurrency between July 2023 and June 2024, representing a 4.06% increase from the $56.7 billion traded in the previous year.
Economic Struggles Fuel Cryptocurrency Growth
Nigeria’s economic situation has been challenging for years, but the recent foreign exchange (FX) crisis has intensified the demand for alternative means of transactions, especially crypto. As the national currency, the naira, continues to weaken and inflation soars, many Nigerians have sought digital currencies as a way to protect their assets.
Chris Maurice, CEO and Co-Founder of Yellow Card, a cryptocurrency exchange, explained the growing trend: “About 70 percent of African countries are facing an FX shortage, and businesses are struggling to get access to the dollars they need to operate.”
Cryptocurrency Offers a Solution to Dollar Shortages
The shortage of dollars has left businesses in Nigeria scrambling for solutions. With banks running out of foreign currency, many Nigerians are turning to stablecoins, a form of cryptocurrency that maintains a stable value by being pegged to fiat currencies like the US dollar. These digital assets have become a critical tool for Nigerians trying to preserve their wealth in an unpredictable economic environment.
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“The banks don’t have dollars, the government doesn’t have dollars, and even if they did, they wouldn’t give them to you,” Maurice said. “That’s why we’re seeing more people turn to stablecoins.”
A Broader Trend Across Africa
Nigeria is not alone in its cryptocurrency boom. The Chainalysis report notes that cryptocurrency adoption is growing in several African nations, largely driven by FX shortages and economic instability.
In fact, across Africa, many citizens and businesses are now using digital currencies for everyday transactions, from paying for goods and services to remittances.
Maurice emphasised that the trend will continue as long as foreign currency shortages remain: “Cryptocurrency is providing an alternative to people who can’t access the traditional financial system.”
Nigerian Government Responds to Cryptocurrency Growth
In response to this increasing use of crypto, the Nigerian government has begun to take a more accommodating stance. Recently, Nigeria granted official approval to some cryptocurrency operators, recognizing the role digital currencies play in the economy.
This marks a shift from earlier resistance when the Central Bank of Nigeria banned cryptocurrency transactions through financial institutions in 2021.
However, concerns remain. While many see cryptocurrency as a solution to Nigeria’s economic challenges, critics warn that the lack of regulation could lead to exploitation and financial losses for those unfamiliar with the technology.
The Future of Cryptocurrency in Nigeria
Despite these concerns, the adoption of cryptocurrency in Nigeria shows no signs of slowing down. With $59 billion worth of transactions recorded in just a year, the digital economy is becoming an integral part of the country’s financial landscape.
As the FX crisis persists and inflation remains high, more Nigerians are expected to continue embracing crypto.
As Maurice concluded, “Cryptocurrency isn’t just a trend. It’s becoming a necessity for many Nigerians who are looking for financial stability in a time of uncertainty.”
Emmanuel Ochayi is a journalist. He is a graduate of the University of Lagos, School of first choice and the nations pride. Emmanuel is keen on exploring writing angles in different areas, including Business, climate change, politics, Education, and others.
