#Crypto: After the Cryptocurrency ban, Bitcoin Peer-to-Peer Trading has Increased by 27% in Nigeria.

Nigerians are using peer-to-peer Bitcoin trading sites to get around government limits on crypto exchange accounts.
Bitcoin Trading

In Summary

  • In Nigeria, three months after a ban on financial institutions dealing with crypto firms, P2P trading volumes are surging.
  • Worsening economic conditions, according to analysts, necessitate the creation of alternatives to the conventional financial system.

Nigerian peer-to-peer (P2P) Bitcoin trading is booming three months after the country's central bank banned financial institutions from engaging with anything crypto-related.

According to analytics platform UsefulTulips, Bitcoin P2P trading in Nigeria has increased by 27% after the country's central bank imposed restrictions (CBN).

Greaphic Details

According to a spokesperson for Paxful, a leading P2P exchange in Nigeria, “The CBN requested that banks and other financial institutions close the accounts of cryptocurrency exchanges in the country".

"peer-to-peer platforms like Paxful are not affected by the action," she added, adding that "as a result, all peer-to-peer services are seeing growth".

Paxful's main market and the largest P2P market in Sub-Saharan Africa is Nigeria. Though P2P trading is also on the rise in Ghana and Kenya, nearly $103 million was traded in Nigeria over the last 90 days on P2P exchanges Paxful and LocalBitcoins, up from $80.6 million three months ago.

Nigeria is known as Africa's Bitcoin Nation due to the country's youth's passion for cryptocurrency; its trading volumes set records prior to the controversial ban.

Bitcoin's price has risen nearly 500 percent since the beginning of its new bull run at the end of 2020, reaching record highs of nearly $65,000 this month before reversing to $54,000.

In comparison to other countries, Africa's total trading crypto volumes are small, accounting for just 2% of global volumes. Nevertheless, the advent of Bitcoin and other cryptocurrencies generate life-changing value here.

Bitcoin Peer-to-Peer Trading Up 27% in Nigeria Since Crypto Ban - Decrypt

Nigeria’s faltering economy sparks crypto action

According to Paxful's spokesperson, capital controls on outflows, high transaction costs on foreign transactions, and a $100 minimum transaction limit on card payments on international websites are among the factors leading to crypto's popularity in Nigeria.

However, the volatility of Nigeria's currency, the Naira, may be the most important factor. According to the World Bank, up to 20 million Nigerians, or around 10% of the population, could be forced into poverty by 2022, owing to the pandemic-related economic crisis; the country's unemployment rate has quadrupled to 33% since President Muhammadu Buhari took office in 2015.

Danny Oyekan, the CEO and founder of blockchain investment firm Dan Holdings, told Decrypt that Nigerian users were largely responsible for the $21 million in transactions on his crypto payments app, Coins App, since its launch six months ago. When the restrictions were revealed in February, he predicted, "[The] ban will be met with action".

Most of the activity takes place on the peer-to-peer (P2P) network.