Global cryptocurrency markets have been in a downward spiral since November 2021. Bitcoin plunged from its all-time high of over $67,000 to around $17,000 and is currently trading around $21,000. become dormant as the crypto market has lost over $1.5 trillion in market capitalization. But in six countries, more than a third of the adult population buys or sells cryptocurrency at least once a month, according to a recent report from morning consultation.
In Nigeria and Turkey, more than 50 percent of adult cryptocurrency traders are still active, putting both countries at the top of the list out of 40 countries surveyed in the report.
Some of the world’s most developed countries are at the low-adoption end of the scale, with the UK, Germany, France, Japan and China having only around 10 percent of their adults as active crypto traders. Meanwhile, South Africa, Russia and India are in the top 10. What is driving this great interest from Nigerians?
A match made in chaos
Nigeria, Pakistan and India are among the top six most populous countries in the world and will each have more people by 2050, for The latest UN projections. Therefore, it is safe to label them as emerging crypto markets. But the similarities between countries with high crypto adoption today are more monetary than demographic.
With the exception of the United Arab Emirates, most of the countries in the top 10 for cryptocurrency trading have per capita incomes below $30,000 (in purchasing power parity terms), putting them on the spectrum. lower income. Nigeria is at the lower end of that spectrum, with a per capita income of $5,000.
Cryptocurrency holders and traders are in it primarily to make money. Meanwhile, Nigeria has a largely unemployed young population. It has the third highest official unemployment rate in the world: almost 1 in 3 young people has nothing to do. Nigerian university students have joined this idle congregation as the Academic Staff Union of Universities (ASUU) has been on strike since February 14. Trading cryptocurrency has become one of the ways these young Nigerians keep busy and earn a living.
Additionally, seven of the top 10 countries, including Nigeria, have rigid controls on currency transactions. The most striking examples are Turkey and Argentina, two countries where inflation has skyrocketed recently. In these countries, traders have been using cryptocurrency as an inflation hedge until the recent crypto winter. In July 2020, several Nigerian banks lowered debit card spending limits for Nigerians at home and abroad. Stanbic IBTC bank, for example, lowered the limit from $500 to $100, while Zenith bank lowered it to $200. Then, in the first quarter of 2022, banks tightened the screws on international transactions using naira debit cards to $20-$50 per month. The goal is to hoard dollars as Nigeria’s foreign exchange reserves have been in sharp decline. Thats not all. Last week, many African fintech startups that offer virtual dollar card services sent emails to their customers stating that their virtual card service will not be available indefinitely. But people are circumventing these restrictions with crypto. Amid the widespread fintech announcement, crypto payment startups like Bitmama took the opportunity to announce that their virtual card services are still active.
—₿itmama.eth (@bitmamaexchange) July 15, 2022
While most cryptocurrency users are looking for profit, the Morning Consult report shows that they exhibit other characteristics that could be useful to fintech developers in Africa. For example, cryptocurrency owners use more alternative financial platforms, such as non-banking applications, than non-holders and are more likely to send remittances and take out payday loans.
That being said, p.Policy makers and innovators still have a lot to learn about financial services in Nigeria. Last year, the Central Bank of Nigeria launched a central bank digital currency called e-Naira a few months after restricting crypto transactions through banks. But nowadays, people do not use e-naira and the adoption of cryptocurrency has increased. It is clear that cryptocurrencies will not be leaving the Nigerian scene any time soon, and eventually everyone will have to align. Other African countries, including Morocco and the Central African Republic, are taking sides with cryptocurrencies.