Cryptocurrency Trading Booms in Nigeria Amidst Naira Devaluation

By: Damian Okonkwo

The Nigerian Naira has been depreciating against the US dollar for several years, and the situation has only worsened in recent months with the Naira exchanging at its lowest rate ever against the US dollar in August 2023. This has led to a surge in cryptocurrency trading in the country, as investors look for ways to protect their savings from inflation.

According to a recent report by Chainalysis, Nigeria has become the largest market for cryptocurrency trading in Africa, overtaking every other African country in 2023. The report also found that the volume of cryptocurrency trading in Nigeria has increased by over 200% within the past few years.

Many factors have contributed to the growth of cryptocurrency trading in Nigeria. One factor is the lack of confidence in the Naira. The Nigerian government has recently devalued the Naira and further floated the exchange rate; against the previous official rate controlled by the CBN. This has triggered strong volatility for the Naira causing more people to lose confidence in the future of the currency. On the other hand, Cryptocurrencies are not subject to government control, so their value is more stable.

Another factor triggering large interest in Cryptocurrency trading in Nigeria is the high cost of international remittances. Traditional banks are known to charge high fees for sending money abroad, and this can be a significant burden for Nigerians who have family and friends living in other countries. Cryptocurrencies offer a cheaper and faster way to send money internationally.

Finally, the rise of social media has also played a role in the growth of cryptocurrency trading in Nigeria. Platforms like Twitter and Telegram have made it easier for people to learn about cryptocurrencies and to find other traders.

While the growth of cryptocurrency trading is a positive development for some Nigerians, it also poses some risks due to its strong price volatility. This means; that investors could lose money if they are not careful when they invest in crypto.

Additionally, cryptocurrencies are not regulated by any government, so there is no guarantee that investors will be protected if something goes wrong.

Despite the risks, the growth of cryptocurrency trading in Nigeria is a sign of the growing financial sophistication of the country's population. As the Naira continues to depreciate, even more Nigerians will likely turn to cryptocurrencies as a way to protect their savings and make international payments.

Conclusion

The growth of cryptocurrency trading in Nigeria is a complex issue with both positive and negative aspects. Investors need to be aware of the risks involved before investing in cryptocurrencies.