Despite the clampdown on bitcoin exchanges and orders for start-ups that embarked on initial coin offerings (ICOs) to return investors’ money in China in 2017, transactions stayed bullish growing more than 2,000 per cent in dollar terms this year.
Nigeria came a distant second with an increase of almost 1,500 per cent this year, buoyed by a foreign exchange crisis that saw an overhaul of the market and the weakening of the naira to as much as 12.4 per cent this year.
“We just announced 1 million users on our platform, between then and now we have added about 500,000 more customers,” said Owenize Odia, Luno’s country manager in a chat with BusinessDay. Luno provides local bitcoin services to Nigerian customers and had recently added Ethereum on its platform.The situation in Nigeria is not too dissimilar from Zimbabwe, whose unstable economy and depleted foreign exchange markets saw citizens turn to bitcoin as storage of value this year. At one point, Zimbabwe had the highest bitcoin price in the world.
“We are getting more signups on a daily basis; people have been calling asking for bitcoin. Everybody is like joining the wagon despite the criticisms the crypto currency has faced,” Odia said.
According to statistics from localBitcon, in 2017, Nigeria had a total cash trade of 7,913 as Lagos leads the list of cities trading with bitcoin in Nigeria with a total of 1, 496; followed by Abuja with 381, and Port Harcourt with 314; Kaduna and Benin City had 141 and 90 respectively to complete the top five cities trading in bitcoin.
“The people of Nigeria are showing the world the true transformative power of bitcoin and cryptocurrency that makes a real difference in people’s lives,” said Ray Youssef, co-founder and CEO of Paxful. “We all thought bitcoin would be used by people making under $2 a day but in reality, it is being most used by entrepreneurs and the African middle class to safeguard their wealth from inflation, make online payments, restore their importing and exporting power. P2P is the way Africa chooses to use crypto for ease of use, accessibility and speed.”
Meanwhile, bitcoin prices surged to record high of $20,300 on the Coindesk Bitcoin Price Index since the CME Group listed it on its futures platform. It retreated to $18,285.50 as at the time of writing this article.
Analysts at Naira Exchange (Nairaex) told BusinessDay that the growing market in South Korea may have affected demand for the cryptocurrency.
“Bitcoin has been embraced by the nation due to its fast transaction times and potential to rival traditional fiat currencies. Due to the aggressive buying of bitcoin coming from the region even the state has stepped in trying to control and regulate the trade,” the Nairaex analysts said.
“In the West, the primary catalyst for bitcoin growth remains the bitcoin futures which have been launched by CBOE (and recently CME), institutional investors can legally dip into bitcoin markets via regulated channels. The Chicago mercantile exchange will also be launching bitcoin futures later next year.”
Analysts say it may be difficult for authorities to regulate cryptocurrencies which they have little control over, because they do not depend on central banks or financial institutions rather they depend on online trading platforms that facilitate exchanges and can be transferred anywhere in the world.
So far, Nigeria’s Central Bank of Nigeria (CBN), like most apex banks across the world, has issued warnings on the risk of cryptocurrencies. The apex bank also collaborated with the Nigerian Deposit Insurance Commission to understudy cryptocurrencies. The committee began sitting this year.
Nevertheless, local bitcoin exchanges are bracing for the future of regulation. Odia told BusinessDay that Luno has since put together structures that could possibly align with the requirement of the regulator.
“We see the CBN committee on bitcoin coming up with something probably next year,” Odia said.
FRANK ELEANYA & OLADIPO OLADEHINDE