Nigeria emerges 2nd largest bitcoin market after United States

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With 60,215 bitcoins, valued at more than $566 million which, apart from the US, zNigeria is 2nd largest bitcoin market in the world followed by China as the third Naija247news seen on Paxful, a leading peer-to-peer bitcoin marketplace.

The data scraped from Coin Dance shows from the beginning of May 2015 to the middle of November this year, bitcoin trade in Nigeria have increased yearly at least 19% in volume since 2017, and the highest volume (20,504.50) was traded in 2020.

Bitcoin trade had its highest spike of 30% this year during the national lockdown in the country and the highest volume traded during the peak of the pandemic. Between January and September, Paxful reported a 137% increase in new registrations in Nigeria.

Peer-to-peer (P2P) exchanges, which are decentralized platforms that directly connects buyers and sellers without third parties are the most popular way to buy bitcoin in Africa because users do not have to worry about cryptocurrency regulation by the government.

Paxful is the largest platform for P2P trade in Africa and overtook LocalBitcoins in June this year to be the Largest P2P bitcoin marketplace in the world, controlling 52% of the market share.

The company says Nigerians make up around a quarter of its customer base with 1.3 million registered accounts.

“They mostly use the platform for peer-to-peer and arbitrage trading,” says Nena Nwachukwu, Paxful Nigeria regional manager.

“Remittances is also a popular use case.” Nwachukwu says bitcoin transfers are “much cheaper and faster than using traditional money transfer operators.”

The lack of bitcoin liquidity was the first obstacle to solve to introduce bitcoin to Africa,” says Ray Youssef, co-founder of Paxful.

Nigerians are often restricted on international platforms such as PayPal, which does not allow payment to Nigeria, and local banks place a cap on international transactions and charge high fees for transactions due to dollar deficiency.

“People want to be able to buy and sell, transact internationally and the more the traditional channels are being restricted the more people trade crypto and mainly bitcoin,” explains Eleanya Eke, co-founder of Buycoins Africa. “And the best thing about it is that it’s almost impossible to stop. If you block the exchange it moves to Peer-to-peer platforms that are non-custodial.”

The increased awareness and availability of easy-to-use bitcoin platforms to Nigerians have largely increased bitcoin liquidity in the country, therefore solving the first problem hindering adoption.

Nigerians now have several formal and semiformal bitcoin platforms to use, ranging from international platforms including Paxful, Binance, and Luno, and local ones such as Quidax, Busha, and BuyCoins.

However, long-term watchers say most trading in the country is done on informal channels such as Telegram, WhatsApp, and WeChat.

Bitcoin, which traded as low as $3,600 in March due to a massive sell-off on global financial markets, has this month surged past $20,000 for the first time.

While in the past, the value has increased like this only to later drop drastically in a few weeks, some analysts say this increase may continue into 2021 as it appears it is due to the growing interest of institutional investors in the cryptocurrency.

Institutional investors such as MassMutual and MicroStrategy were reportedly planning to purchase hundreds of million-dollar worth of bitcoin, while PayPal, a top global online payment company recently added cryptocurrency to its functionality, letting people use bitcoin to pay for things online.

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Godwin Okafor is a Financial Journalist, Internet Social Entrepreneur and Founder of Naija247news Media Limited. He has over 16 years experience in financial journalism. His experience cuts across traditional and digital media. He started his journalism career at Business Day, Nigeria and founded Naija247news Media in 2010. Godwin holds a Bachelors degree in Industrial Relations and Personnel Management from the Lagos State University, Ojo, Lagos. He is an alumni of Lagos Business School and a Fellow of the University of Pennsylvania (Wharton Seminar for Business Journalists). Over the years, he has won a number of journalism awards. Godwin is the chairman of Emmerich Resources Limited, the publisher of Naija247news.

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