The rowdy citizens of Lagos, Nigeria are by nature traders and survivors. However, your government has so poorly managed the nation’s money that it is susceptible to wilderness fluctuations in devaluation. And while it could be argued that Bitcoin is also volatile, it’s actually not comparable. With access to peer-to-peer exchanges like Localbitcoins, Nigerians are even revolutionizing their traditional outdoor marketplaces and offering a financial oasis in rather dark times.
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Bitcoin’s volatility doesn’t match Nigeria’s naira
“I can use Bitcoin for anything now […]“Soji, a web designer from Lagos, said to Jeremy Kirshbaum and Pelumi Oguntemehin. “It means that I can invest right now and also pay anyone except old people, I’ll send them bitcoin. But some people think Bitcoin trading is a scam and they are also afraid of being hacked as many people don’t know how to protect themselves online. ”Bitcoin is a handy way for Soji, hosting Obtaining services abroad from providers who simply do not accept their country’s domestic fiat currency, the naira.
Bitcoin has been heavily criticized in professional financial circles for its legendary volatility. Wild price fluctuations can and certainly do occur. However, it’s not a game for Nigeria’s naira. As Long hash explains: “Silas Okwoche is a self-taught engineer […]. He co-founded a cell phone company called Nerve Mobile that used Android smartphones from Shenzhen, China. Silas found a Chinese partner via the Alibaba e-commerce platform. Nerve Mobile’s business was profitable for a while but ended for a reason unrelated to Silas’ product. The Nigerian naira lost over 15% against the Chinese yuan, and hardware became too expensive. The story of Silas is not extraordinary: Nigerian business people struggle with currency volatility every day ”, reporter insist.
“The diagram shows the volatility of Naira, Bitcoin and Ethereum. In many places, the naira is more volatile than either of the two major cryptocurrencies. “
Nigeria is located on the African continent on its western curve and hugs the Gulf of Guinea, a click north of the equator. It borders four countries immediately to the east, like a kind of horseshoe, with only the South Atlantic opening to the west. Lagos is the largest city in Nigeria and at the same time the most concentrated city in Africa. According to many estimates, it is one of the fastest growing cities in the world. It is routinely Africa’s highest GDP and functions as a financial center and bustling haven. A wonderful discussion of Lagos can be found in Robert Neuwirths presentation, “The power of the informal economy”, if admittedly a bit out of date.
Today, the broader country itself looks after India in extreme poverty, there CNN Reports, “Nigeria has overtaken India as the country with the greatest number of people living in extreme poverty, with an estimated 87 million Nigerians, or about half the country’s population, living on less than $ 1.90 a day […] In Nigeria, as in other countries on the continent, this number is expected to increase. “By the end of 2018, a total of around 3.2 million more people will be living in extreme poverty in Africa than today,” said the researchers. All of this and the largest oil producer in Africa.
Crypto as an oasis in extreme poverty, sectarian violence
At this point in time, central Nigeria has sunk into sectarian violence. Reports are patchy, but most outlets show dozens of people killed as ethnic and religious tensions rise. Fifty houses were destroyed if the local police are to be believed. And these tensions have been brewing between shepherds and farmers since 2013 at the latest.
Lagos then becomes a beacon of hope in a sea of economic and sectarian devastation. The price settlement of Bitcoin, the sideways movement of the past few weeks, ironically, has allowed more Lagos businesspeople to get into crypto. It also prevents fraud. “At the moment, most of the Ponzi scheme dealers are out of the market because they were only there for profit reasons. Now that Bitcoin is stable and the profit margin is low, we will see gradual growth and diverse application of blockchain technology solutions, ”said Toyosi investor and crypto trader Long hash.
Jeremy Kirshbaum and Pelumi Oguntemehin state, “It is difficult for a cryptocurrency to function as both a speculative asset and a currency. Countries like Nigeria, which suffer from high volatility or institutional uncertainty, actually need Bitcoin as a medium of exchange. ”Merchants like Toyosi are turning to remittance brands like Sure Remit in hopes of reducing overall costs. “Sure Remit,” they explain, “uses a cryptographic token as an alternative to send money home from abroad. If people are using cryptocurrency for normal transactions and the value is more stable, Sure Remit can provide a more useful service. ”
The key is fighting with its fiat currency, the naira. Its lightning devaluations add “another level of uncertainty to companies buying goods or components from abroad. That is why Nigeria offers the perfect use case for cryptocurrencies like Bitcoin. ” Long hash stressed. Another tech businessman, Temo, “works on hardware ventures and buys his components from China. When he does, the most convenient is to buy bitcoins on Localbitcoins.com or any other peer-to-peer marketplace using naira and then sell them for Chinese yuan. It’s much faster than using regular channels and costs a fraction of the price. If he uses a normal bank transfer, he will be charged high fees by both the sending bank in Nigeria and the receiving bank in China. In addition, it can take up to a week for the transfer to transfer the money. “
Do you think countries like Nigeria will continue to benefit from using cryptocurrency? Let us know in the comments.
Images via Pixabay, Longhash.
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Tags in this story
Africa, Alibaba, Bitcoin, Chinese Yuan, Cryptocurrency, Devaluation, Ethereum, India, Lagos, LocalBitcoins, N-Economy, Nigeria, Nigerian NAira, Ponzi, Sure Remit
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