Nigeria Leads Africa’s Pivot Towards Crypto For Payments
A growing number of young Africans are looking to crypto as an alternative to existing payment systems.
That outlook gets support from Google Trends, which shows that Africa and Nigeria in particular, leads in the volume of Bitcoin searches on the internet. Further, peer-to-peer trading volumes continue to grow rapidly.
The trend is highest in Lagos, Nigeria, a city of nearly 21 million residents, where a growing number of people have demonstrated an awareness of what Bitcoin (BTC) represents.
Reportedly, most of those showing interest in the top crypto prefer it to the U.S. as a practical replacement for foreign currency.
BTC is made even more attractive by the fact that major payment providers like PayPal bar locals from receiving cash transfers from abroad, citing massive cases of internet fraud.
The burgeoning freelance community in the country has also contributed to a significant shift of the unemployed towards crypto payments.
Nigeria’s National Bureau of Statistics (NBS) recently noted that nearly 23 percent of the youth were unemployed in 2018. Most of them, unsurprisingly, are into freelancing and are looking to bitcoin for payments from foreign-based clients.
With over 100 million internet users, Nigeria’s mobile tech industry contributes about 10.5 percent to the GDP. And through the services of companies like BitPesa, Bitcoin is seen as being much cheaper, faster, and less stressful compared to getting money from abroad using the U.S. dollar.
Not much use for Bitcoin’s underlying tech
Despite the growth in the number of people interested in bitcoin in the country, there’s evidence that the underlying blockchain technology is massively underutilized. For example, data from node distribution tracker Bitnodes shows that the number of Bitcoin nodes in the country is too small.
The focal point appears to be the use of BTC as a trading asset, with a few going on to use it instead of the U.S. dollar. The argument is cemented by the country’s growing peer-to-peer (p2p) trading ecosystem.
Bitnodes, which tracks the global Bitcoin nodes distribution, shows that there are virtually no nodes in the country. Yes, Lagos leads the way in online BTC searches, but only a handful of people run Bitcoin nodes.
Yet this is seemingly a result of issues like constant electricity outages and a lack of education concerning blockchain technology.
According to Victor Alagbe, the COO of renewable energy startup OneWattSolar, the same pattern applies to the overall adoption of cryptocurrencies by retailers. So, people who get paid in crypto or who buy it, do not get to spend that on buying goods or paying for services.
The unfortunate situation has forced most crypto holders to think of BTC in terms of the massive 2017 price rally. As such, bitcoin enthusiasts appear to favor trading.
Crypto payments mapping site Coinmap reveals that people can buy or pay with Bitcoin at over 14,600 locations globally. However, in Africa, only South Africa registers any significant presence on the bitcoin retail payments map.
Pivoting towards Bitcoin
Nigerians’ pivot towards bitcoin began in 2016 in the aftermath of the country’s most debilitating recession in nearly 30 years. Data from Coin Dance indicates that p2p trading volumes in BTC began to spike after the downturn, with several businesses springing up to offer crypto buying services.
The local Bitcoin over-the-counter (OTC) scene is the focal point of this drive. The adoption is most visible among university students, freelancers and some company employees who turn to BTC as an avenue to create a new revenue stream.
Another factor that may help push crypto and blockchain adoption is the massive opportunity the nascent technology is likely to bring to the troves of the unbanked or underbanked population.
A recent report from the Central Bank of Nigeria (CBN) revealed that almost 31 million people in the country have bank accounts. On the other hand, the number of registered voters is pinned at 83 million.
That means that a good number of the over 6o percent of eligible bank account holders that don’t own accounts could benefit from bitcoin and other blockchain-powered projects.
Scams like the Russian Mavrodi Mondial Moneybox (MMM) among others could have dented Bitcoin’s adoption chances, but organizations such as the Nigerian Blockchain Alliance (NBA) are spearheading crypto education efforts.
They are also battling a proliferation of scams in a country noted as a major destination of internet fraud.
Disclaimer: This is not investment advice. Cryptocurrencies are highly volatile assets and are very risky investments. Do your research and consult an investment professional before investing. Never invest more than you can afford to lose. Never borrow money to invest in cryptocurrencies.