As the global business community transits from physical cash to digital currency, Nigeria is also not being left out in the quest for a more viable method of transaction and store of value.
The country currently ranks 8th (out of 154 countries) in a Chainalysis report on the geography of crypto in its 2019-2020 global adoption index.
An assessment of the volume of transactions carried out by Nigerians using Bitcoin (BTC) on a weekly basis shows an immense desire of the citizens for digital currency.
Recent statistics by UsefulTulips, a data analytics website, showed Nigerian Naira leading Africa’s peer-to-peer transactions in the last 30 days, with a monthly volume of $32.3 million, followed by South Africa’s Rand and Kenyan Shilling, with volumes of $9.3 million and $8 million respectively.
This apparent astronomical growth of crypto adoption in the country could be linked to the fact that Nigeria has one of the youngest populations in the world that is also tech-savvy. Nigerian Youths make up about 43.84 percent of the entire population of over 200 million people. The COVID-19 pandemic and continual devaluation of the Naira has also given rise to consideration for crypto as a means of hedging against the economic impact of the pandemic and Naira volatility.
Joshua Opayemin, who runs a small digital business in the Lagos metropolis, speaks on why he decided to give crypto a try. “
“Nigeria’s business landscape is very difficult to operate in. I do a lot of cross-border transactions, and, in most cases, I lose a lot of money to unfavorable exchange rates, not to mention the high costs of transactions set by the Nigerian banks. With cryptocurrency, I am able to conduct my business at a very minimal cost, in record time, and without the inconvenience that is associated with traditional money transfer services.
Perhaps, one of the biggest score points for cryptocurrency is Tether (USDT). With a market capitalisation of over $17 billion, Tether is a stablecoin that has established itself as one of the most valuable crypto assets, aiding users in hedging against a volatile market, as they expand their portfolios.
Tether is pegged to the US Dollar, meaning that its value is directly tied to the value of the fiat currency. This is a good alternative for individuals and businesses operating in countries with weak home currency as they are able to mitigate the losses from inflation by simply converting and saving some of their money in USDT. This way, they have the advantage of being able to shield their money from inflation, and once the currency stabilizes, convert their assets back to the desired fiat.
With USDT, users can also lock cryptocurrencies like Bitcoin in its fiat value at the time of exchange. This can be used to secure the value of BTC and convert Naira to USDT to save funds from devaluation.
“This is similar to people converting Naira to USD, but with Paxful, they’ve got the flexibility to convert, withdraw or transfer the funds quickly, and without the hassle of using the exchange services or banks. Also, businesses and organisations can do the same and use USDT for outward or inward remittances and instant cross-border payments to suppliers or merchants outside the country,” remarks Ray Youssef, CEO, and co-founder of Paxful.
Paxful recently announced the addition of Tether to its platform where users can hedge their funds by instantly converting BTC to USDT and vice versa, thus helping to protect from volatility. Users can also buy and sell USDT with over 300 payment methods. Since its inception, The company has added 1 million users per year, and is on track to sign up an additional 2 million users by the end of 2020. The company has over 4.5 million registered users and has grossed over $4.6 billion in trading volume.