Bitcoin has the Nigerian Government in a panic mode
- Bitcoin and other cryptocurrencies are becoming more and more popular in Nigeria
- Expats prefer to send back remittances in Cryptocurrency to insulate against fluctuation
- Rising inflation and falling values of local currency also surge the popularity of cryptocurrencies
As per data from the bitcoin trading platform Paxful, Nigeria is next only to the US for bitcoin trading. Users in Nigeria received $2.4 billion worth of crypto assets in May. It showed a rise up from $684m last December, according to blockchain research firm Chainalysis.
The stunning rise in the popularity of Bitcoin can be attributed to several factors. First, Nigeria has been racked by political turmoil, uncontrolled inflation, currency regulations, contributing to the phenomenal rise of cryptocurrencies in Nigeria.
Cryptocurrency is viewed with suspicion by nations.
Cryptocurrency is always looked at with suspicion by nations. Nigerian Government also took fright by the rapid rise of cryptocurrency trade and banned cryptocurrency transactions through licensed banks. The Nigerian Government in July announced a pilot scheme for creating a new government-controlled digital currency. It hoped to suppress the rising popularity of cryptocurrencies as an alternative tender.
However, these measures did not dampen the popularity of the crypto assets, continuing to rise. Nigeria’s example is a lesson for other nations trying to regulate the spread and popularity of cryptocurrencies.
Clampdown on Bitcoin by many nations
Other nations are also trying to have their digital currency to rein the surging popularity of cryptocurrencies. Britain’s chancellor, Rishi Sunak, wants to start a central-bank-controlled version of digital currency, which is already being named Bitcoin. In addition, regulators in Europe are getting their act together to make digital currencies more traceable to combat money laundering. In rural China, Bitcoin mining, a computational process that creates Bitcoin, has been switched off after a Government diktat that there will be no cryptocurrency mining.
Several nations are trying to clamp down on the cryptocurrency sector, including Egypt, Turkey, and Ghana. However, most countries are wary of potentially vast movements of digital funds beyond their regulatory controls.
Nigeria has a young population that is more progressive and amenable to digital currencies. As the nation’s people struggle to alleviate their poverty, numerous pyramid schemes are increasing. Trading in foreign exchange is widespread in Nigeria. The expatriate Nigerians who work abroad send back their earnings worth more than $17bn in 2020. Digital currencies play a significant role since they are immune to exchange fluctuations. Compare this with the local fiat currency Naira which has plummeted almost 30% against the dollar in the past five years.
Political factors have also come into play. Last October, Nigeria was rocked by civil protests, and thousands gathered on the street5s to protest against the police brutality and the oppression by the infamous Sars police unit. As a result, security forces killed scores, and bank accounts of prominent civil society leaders were blocked.
The appeal for donations by Feminist Coalition, a collective of 13 young women founded during the demonstrations, attracted global attention as they raised funds for protest groups and supported demonstration efforts. When their accounts were suspended, the activists took to cryptocurrencies to finance the protests.
The FemCo bitcoin donation page was re-shared by a prominent advocate of cryptocurrencies and founder of Twitter, Jack Dorsey. However, it invited the ire of the Nigerian Government, and they banned Twitter from Nigeria.