In brief

  • P2P trading volumes are surging in Nigeria, three months after a ban on financial institutions trading with crypto companies.
  • Analysts point at worsening economic conditions, and the necessity of alternatives to the traditional financial system.

Three months after Nigeria’s central bank restricted financial institutions from dealing with anything crypto-related, peer-to-peer (P2P) Bitcoin trading in the country is having a heyday. 

According to analytics platform UsefulTulips, Bitcoin P2P trading in Nigeria has surged by 27% since restrictions were introduced by the country's central bank (CBN).

90 day volumes in africa
90-day trading volumes in sub-Saharan Africa compared. Image: UsefulTulips.

"The CBN requested that banks and other financial institutions close the accounts of cryptocurrency exchanges in the country,” a spokesperson for Paxful, a leading P2P exchange in Nigeria, told Decrypt. However, as individuals are not banned from using cryptocurrencies, “peer-to-peer platforms like Paxful are not affected by the action," she added, noting that "as a result, all peer-to-peer services are seeing growth." 

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Nigeria is Paxful’s biggest market and the largest P2P market in sub-Saharan Africa. While P2P trading in Ghana and Kenya is also on the rise, almost $103 million was traded in Nigeria in the past 90 day period on P2P exchanges Paxful and LocalBitcoins—up from $80.6 million three months before. 

The enthusiasm with which the country’s youth have taken to crypto means that Nigeria is often called Africa’s Bitcoin Nation; its trading volumes made records prior to the controversial ban.

The price of Bitcoin has rallied by almost 500% since the start of its latest bull run at the end of 2020, hitting record highs of almost $65,000 this month before a pullback to $54,000.  

And while Africa’s overall trading crypto volumes are tiny, a mere two percent of global volumes, the emergence of Bitcoin and other cryptocurrencies create life-changing value here, compared to other regions. 

Nigeria’s faltering economy sparks crypto action

Stringent capital controls on outflows, high transaction costs on international transfers, and a minimum transaction limit of $100 on card payments on international websites are among the factors contributing to the popularity of crypto in Nigeria, said Paxful’s spokesperson. 

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But the instability surrounding Nigeria’s currency, the Naira, is perhaps the key factor. According to the World Bank, up to 20 million Nigerians, or approximately 10% of the population, may be driven into poverty by 2022 largely due to the pandemic-related economic crisis; since President Muhammadu Buhari took office in 2015, the country's unemployment rate has quadrupled to 33%.

Danny Oyekan, CEO and founder of blockchain investment company, Dan Holdings, told Decrypt that Nigerian users were largely responsible for transactions on his crypto payments app, Coins App, surpassing $21 million since its launch six months ago. “[The] ban will be met with action,” he predicted in February when the restrictions were announced. 

P2P is where much of that action is taking place.

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