Cryptocurrency in Nigeria, which includes cryptocurrency trading, has been booming for the last 5 years. The spike in crypto prices in 2020, even made it bigger, making Nigeria the second biggest home to bitcoin in the world.
What is cryptocurrency?
It’s the internet’s money. It allows you to pay for goods and services without having a need for a bank.
It’s just like your paper money, but this is digital, which means you can’t hold it physically. There are different types of cryptocurrencies, including bitcoin, monero, dash and so many others.
Just like normal currencies that can be traded – for example you can trade Naira against Dollars or Dollars against Euro. They call it Forex. You can also trade cryptocurrencies.
Benefit of Cryptocurrencies
The good thing about cryptocurrencies is that no one can determine how you’ll spend it. Unlike, normal currencies that the central bank can limit the amount of money you can withdraw from your bank account or freeze your bank account and not allow you to withdraw.
For example, cryptocurrencies came to the rescue in Nigeria after the central bank of Nigeria frustrated protesters from getting money to fund the #EndSars protest.
Did CBN ban cryptocurrencies?
The cbn released a circular in February 2021 saying that it is restricting financial institutions like banks and other payment providers from servicing crypto companies.
A lot of people interpreted this as a ban on cryptocurrencies in Nigeria. But it is not true. The cbn didn’t ban cryptocurrencies in Nigeria. People can still own cryptocurrencies and trade cryptocurrencies.
The cbn news is more important for crypto exchanges that are centralised. Some crypto exchanges don’t accept deposit or process withdrawals, which means they won’t be affected. Examples are Peer-to-Peer exchanges that allow people to trade directly with each other.
So, NO, the cbn didn’t ban cryptocurrencies in Nigeria. Cryptocurrencies aren’t illegal in Nigeria. Everyone can still own, trade and invest in cryptocurrencies.
What is a Peer-to-Peer (P2P) exchange?
A P2P exchange allows you to buy cryptocurrencies directly from another person. The person sends you bitcoin and you credit the person’s bank account.
In the normal crypto exchange, a business acts as a middle-man, when a user sells or buys an asset it is doing it directly through the exchange. So you fund the exchange with Naira to buy bitcoin and you sell on the exchange to withdraw to your bank account.
On the other hand, in P2P exchange cryptocurrencies are bought directly from the other party. Users interact directly with each other and buy & sell at the best price. The exchange’s role is to offer an escrow service that locks the cryptocurrencies until both parties agree to the exchange.
How to own cryptocurrency in Nigeria
You can sign up on a peer-to-peer exchange and buy cryptocurrencies from others.
Examples of P2P exchanges in Nigeria
Popular peer-to-peer exchanges include LocalBitcoins, Remitano, and Paxful.