New York-based blockchain research firm, Chainalysis, has, on Tuesday, reported a growth in cryptocurrency usage in Nigeria in light of to the country’s weakening currency and rising inflation.
Nigeria barred its banks and financial institutions from dealing in or facilitating transactions in cryptocurrencies in 2021, however this did little to stop the use of cryptocurrencies in the country.
The volume of crypto transactions in the West African country grew from 9% between July 2022 and June 2023, amounting to $56.7 billion in nearly a year. The report stated that crypto tokens like Bitcoin and stablecoins became more popular when the naira’s value dived extremely in June and July 2023.
“People are constantly looking for opportunities to hedge against the devaluation of the naira and the persistent economic decline since COVID,” Moyo Sodipo, co-founder of Busha, a Nigeria-based cryptocurrency exchange, noted in the report.
The naira suffered record a depreciation due to reforms enacted by Nigeria’s president, Bola Tinubu, including the scrapping of a popular but costly fuel subsidy. The president stated in July, that scrapping the fuel subsidy saved the country over 1 trillion naira ($1.32 billion) in two months.
Inflation, however, continues to be high, leading Nigerians to continue to seek cryptocurrencies instead. Despite Nigeria barring its financial institutions from enabling crypto transactions, the country remains undecided on whether to ban cryptocurrencies or not.
Despite being blocked from transacting through Nigeria’s banks and financial institutions, cryptocurrency traders have managed to stay relevant through peer-to-peer trading offered by crypto exchanges.