Cryptocurrency adoption in Nigeria, notably in Bitcoin and Tether’s USDT, has been on a steady upward trajectory, according to the latest global cryptocurrency adoption report from Chainalysis, a renowned research group. Despite a crypto bear market, the most populous nation in Africa, has seen a remarkable 9% increase in crypto usage over the past two years, becoming one of only six countries worldwide where transaction volume surged during this period.
Nigerians embrace stablecoins as naira declines by 65%
This surge in crypto adoption in Nigeria might initially seem surprising, given the broader crypto market’s downturn. However, it’s closely linked to the depreciation of the Naira, Nigeria’s national fiat currency, which has lost a staggering 65% of its value against the US dollar since June, following the Central Bank’s decision to allow the Naira’s exchange rate to float. In response to the Naira’s depreciation, households and businesses in Nigeria have been turning to stablecoins and Bitcoin as a means of preserving their wealth and facilitating transactions.
Stablecoins, in particular, have emerged as a crucial tool in this context. Bisola Asolo, the CEO and co-founder of Super, a web3 billing platform, has dubbed stablecoins “crypto’s killer application for the African continent.” Asolo explains that the adoption of stablecoins is driven by their ability to preserve wealth more effectively when compared to the volatile local currency. Binance, the world’s leading cryptocurrency exchange with a daily trading volume of $19.7 billion, offers Nigerians a convenient way to access USDT and other cryptocurrencies.
This accessibility has played a pivotal role in the rising adoption of cryptocurrencies, particularly USDT, in the country. According to Chainalysis, Nigerian exchanges have witnessed a staggering $60 billion in stablecoin transactions between August 2021 and July 2023. This data underscores the significant role stablecoins play in the Nigerian crypto ecosystem. The flight to safety in Nigeria is primarily motivated by mounting inflation and the Naira’s diminishing value. The decision to let the market determine the Naira’s value further exacerbated an already volatile economic situation.
The role of Binance and stablecoins in fueling the crypto boom
Rume Ophi, the executive secretary of the Stakeholders in Blockchain Technology Association of Nigeria, highlights the plight of Nigerian citizens. He noted that a few months back dollar went for about 700, and today it is 1,220 Naira per dollar. He noted that it is a 520 Naira spread. Applying this to $100,000, and that’s a lot of money. Businesses in Nigeria are also embracing USDT and other stablecoins for facilitating transactions. It’s becoming increasingly common to see tour operators quoting their packages in US dollars and offering USDT as a payment option. Stablecoins offer the advantage of hassle-free cross-border transactions and expedited fund transfers.
Rume Ophi emphasizes this convenience, stating that stablecoins are easier to transfer value, and doing business in Africa and transferring funds can be very stressful. Stablecoins will do that in minutes, and the value will be transmitted. Furthermore, Binance has capitalized on the Central Bank of Nigeria’s 2021 decision to restrict commercial lenders from servicing crypto exchanges. This regulatory move led to a surge in peer-to-peer (P2P) crypto trading, with Binance being a key player in this space. The Binance P2P exchange rate for USDT to the Naira has effectively become a parallel currency market alongside the traditional exchange operated by Bureaux De Change agents.
Nigeria’s growing adoption of cryptocurrencies, particularly Bitcoin and USDT, reflects the resilience and adaptability of its citizens in the face of economic challenges. Stablecoins, in particular, have emerged as a lifeline, allowing Nigerians to safeguard their wealth and streamline financial transactions. The situation also underscores the critical role of accessibility and user-friendly platforms like Binance in driving crypto adoption in emerging markets. As Nigerians navigate economic uncertainty and a volatile Naira, the adoption of cryptocurrencies and stablecoins is likely to continue on its upward trajectory.