Cryptocurrency being a big deal in Nigeria is not a breaking news. Nigeria is one of the leading countries adopting crypto at the moment. Almost half the country have properties in crypto. The people of Nigeria do not want to miss out on the opportunities that the virtual currencies offer and so the number of them looking to buy Bitcoin and altcoins are getting high by the minute.
The rate of adoption keeps growing day by day despite the ambiguous legal status of cryptocurrencies in the country. Nigeria has never had a law that governs cryptocurrency, but earlier this year, the Central Bank of Nigeria released a statement that says the use of Bitcoin and other digital assets have been banned in the country.
Initially, the ban was regarded by many to be the end of owning virtual assets in Nigeria. However, the situation took a rather opposite turn as crypto continues to flourish in the country, proving that the ban hasn’t had a major effect on cryptocurrency usage in the country.
Instead, many citizens have adjusted to the current situation. They have found new ways to buy the virtual currencies and continue their trades.
While the government ban has prevented all financial institutions and banks from any crypto transaction and have commanded that they shut down any account involving crypto trade be shut down immediately in this kind of trade. Crypto traders in Nigeria have found a way around this restriction.
The ban has limited one of the most common ways to buy BTC which is the operations of centralized exchanges which are one of the most common ways people buy BTC in Nigeria. On centralized exchanges, people buy bitcoin in Naira directly from their bank accounts and according to the statement released, if you carry out such a transaction, your account is going to be flagged. One of the solution to this is peer-to-peer exchanges.
After the ban, Nigerians turned to P2P exchanges for their cryptocurrency transactions. So while the ban was supposed to limit the number of transactions carried out in the country and affect the growth of crypto, Nigerians have been trading on P2P platforms like Remita no.
On P2P platforms, you don’t buy BTC with the Naira directly from the exchange: you buy from another person. The P2P exchange only serves as a marketplace to bring buyers and sellers together. So on P2P exchange platforms, the buyer transfers the worth of Bitcoin or any altcoin they want to buy directly to the seller’s bank account just like the normal inter-bank transaction and the seller sends the crypto to the buyer’s wallet through the exchange.
No financial institution is needed to authorize the transaction. When you send money directly from one account to another, it is almost impossible for banks to know the purpose of the transaction as it could be used for any other purpose. So P2P trades are difficult for the regulatory bodies to trace and this makes it hard to fish out and shut down such accounts.
A lot of people in Nigeria have turned to Bitcoin for foreign transactions, taking advantage of the decentralized nature of the currency. The ban does not affect the use of crypto for inter-border transfer long as it is not facilitated by a financial institution.
Other reasons why crypto continues to thrive in Nigeria is that a lot of Nigerians use Bitcoin to hedge against the hike as naira continues to lose its value, so crypto traders and investors continue to find ways to buy bitcoin in Nigeria.