Despite CBN Ban On Crypto, Bitcoin Usage Increases By 27%

While the Central Bank of Nigeria has prohibited Nigerian financial institutions from engaging with anything crypto-related for the past three months, recent data shows that its people are gradually looking for other ways to access the world’s most famous cryptocurrency.

According to data obtained from Usefultulips (a Bitcoin analytic data provider), Bitcoin peer-to-peer trading use in Nigeria has increased by 27% since the CBN directive went into effect 85 days ago, with Nigerians moving over $103 million worth of Bitcoins through just the Paxful and LocalBitcoins networks alone.

Despite the recent N5/$ rebate scheme launched by the Central Bank of Nigeria to enable Nigerians in the diaspora to use official platforms to remit their funds instead of doing so through Cryptocurrencies, Bitcoin registered gains and its suitability in hedging against inflation, coupled with access to other crypto assets that offer more viable options, Bitcoin’s suitability in hedging against inflation, coupled with access to other crypto assets that offer more viable options, does not appear to have deteriorated.

Since the start of the new bull run in Q4 2020, the world’s most famous crypto has surged nearly 500 percent, reaching record highs of nearly $65,000 this month before pulling back to $55,000 at the time of writing this study amid heavy institutional purchases spotted in emerging markets.

Some market observers contend that Nigeria’s central bank’s control over the country’s financial sector has further complicated transactional processes in Africa’s largest economy since Bitcoin, while being virtual, still relies heavily on fiat currencies for anything from pricing to determining ownership. Despite this, Bitcoin’s rising popularity has not waned.

Nigeria’s grasp on Bitcoin is bolstered by data compiled from Google Trends, which shows that Africa’s biggest crypto sector ranked first among other countries by a long shot in terms of its participation in Bitcoin, with a perfect score of 100 percent.

Nigeria’s comparatively young educated population, along with the country’s increased internet usage and mobile penetration, has aided Bitcoin’s explosive growth in the face of increasing inflation, which has depleted many Nigerians’ savings.

In addition to providing ridiculously low transaction costs, Bitcoin’s borderless feature makes payment simple for Nigerians.

To put it in perspective, many Nigerian banks charge 1–2.5 percent. Bank costs for a $1 million offshore transfer could reach $10,000, but with the flagship crypto, such a transfer would cost little more than $300, except at peak hours.

As a result, a substantial number of Nigerians already pay a premium for entry to the crypto market, with data from Binance, the world’s largest crypto exchange by value, showing a cost of N607 to 1 USDT with Nigerian banking networks close to the global crypto ecosystem at the time of writing.