Original author: KYRIAN
Compiled by: LlamaC
(Portfolio: FORM 2016, About Tomo: Illustrator of eth Foundation)
I am a Nigerian and stablecoins are my life saver.
I am a Nigerian and Nigeria is my beloved motherland.
my story
Nigeria presents a breathtaking picture of diversity and limitless potential, a land of hope and possibility. With a population of over 200 million, it is the most populous country in Africa and the seventh most populous country in the world. In addition, Nigeria has the largest economy in Africa, with a GDP of over $400 billion.
Nigeria is home to more than 250 different ethnic groups, each retaining its own distinct language, culture and heritage. This unique diversity is a source of our national strength, giving our country a vibrant and colourful cultural fabric.
I come from an ordinary family, without privilege or luxury.
My family embodies the resilience and resourcefulness that characterizes many Nigerian families. While we never lacked for the necessities of daily life, we always dangled on the edge of uncertainty, where one wrong decision could disrupt the rhythm of our daily lives. Like many Nigerian families, we lived under the perpetual shadow of financial stress, were vulnerable to serious illness, and were often on the verge of collapse.
I witnessed first-hand how hard my parents worked to protect us from these dangers. This experience convinced me that I had to work just as hard, if not harder, as they did. I completed my secondary education in 2018 with this mindset.
Eager to become a responsible young adult, I quickly began to look for opportunities to support myself financially in order to reduce the burden on my parents. Not just for food and clothing, but out of disgust at the constant reliance on others to meet my personal needs. Gradually, accepting a weekly allowance became more and more unbearable for me.
It was this deep pain that drove me to the world of cryptocurrency.
Everyone has a unique story before they go down the rabbit hole of this industry. For me, I was not driven by a deep love for the technology, but simply because I desperately needed to survive and wanted to achieve financial freedom in the long term future.
My experience is quite interesting. But first let me explain the role of Nigerians in WhatsApp community. For Nigerians, it is a virtual network. People look for mentors on WhatsApp and mentors add them to the group to teach different skills or mentor their own business.
That’s how I got into the world of cryptocurrencies. One day, I woke up to find myself added to a WhatsApp group that promised to give people financial freedom by teaching them cryptocurrency trading. At first, I ignored it as a scam, as usual. But then, I decided to stick around for a bit. After all, it was free and I had nothing to lose.
Fate had something different planned for me. This was not a scam; the instructors were serious about imparting knowledge. But the course was divided into two stages: the first was free, the second required payment. As the saying goes, there is no such thing as a free lunch, even in the free virtual world.
In the initial stages, I dug deep into the basics of the cryptocurrency industry, which really piqued my interest. It imprinted in my mind that I considered it to be my true path to financial freedom. At that time, my focus was not on the technology, but on the promise of achieving financial freedom.
However, I was a poor student about to enter university and had no one to finance my journey, not even my parents. So, as a discerning Nigerian, I did what we do best – earn money.
With my industrious spirit, I eventually stumbled upon Binance’s AMA (Question and Answer) session, which introduced me to the technology of cryptocurrency. At the time, Binance was doing weekly AMAs with emerging projects, and the session rewarded those who asked relevant questions afterward. While most people thought it was just a routine event, to me, it felt like the only chance to fund my crypto journey, and I took it very seriously. This marked the birth of my passion for cryptocurrency research. I had to familiarize myself with every project that appeared in the AMA session in order to ask the most relevant questions.
As time went on, I started winning some AMA prizes. Soon, my net worth was close to $1,000 (about 360,000 Naira). Even my parents, especially my mom, started taking my new hobby seriously. She would occasionally let me not accompany her to the market or allow me to come home late as long as I focused on my research.
However, over time, I noticed a change in the pace of my financial growth. By mid-2019, my net worth was no longer growing as fast as before. The exponential growth rate I was used to began to stall. Although I was making more money, I noticed that the value of the Naira was not rising proportionally.
Stablecoins
You see, every time I made money on the AMAs, I converted it to Naira. Every time I needed USD for crypto trading, I converted it back. The exchange rate kept going up and it was eating into my net worth no matter how much money I made. That’s when I realized that the future of Naira was going to get worse and worse.
The harsh reality of inflation and currency devaluation was laid out before me, and the workings of the foreign exchange market were an eye-opener for me.
I knew something had to change, and I was afraid I would be plunged into extreme poverty again. My fears led me to convert my entire net worth into USD stablecoins, and I didn’t want to experience the pain of having my Naira become less valuable every time I converted it into stablecoins.
If I feel this way, many Nigerians must feel the same way. I am not alone.
Nigeria is a country of contrasts, where beauty and ugliness, wealth and poverty, hope and despair coexist side by side. Despite this, the resilience of its people remains unwavering as they strive to create a better future for themselves and their children.
Nigeria has a history of instability and corruption, but it is a democracy with a vibrant civil society.
Amid this contrasting landscape, Godwin Emefiele assumed office as Governor of the Central Bank of Nigeria (CBN) on June 4, 2014.
Corruption continues to plague Nigeria, tarnishing its reputation and hindering progress on many fronts. It has permeated all levels of society, causing serious adverse effects. The corrupt influence of Emefiele’s governorship has suppressed Nigeria’s growth.
Godwin Emefiele’s taking over as Governor of the Central Bank of Nigeria (CBN) marks a significant moment in the country’s economic sphere. Appointed by former President Goodluck Jonathan in 2014, Emefiele assumed the position during a critical period of significant challenges and uncertainty for the economy.
These challenges include:
1. Uneven global economic recovery: The global economy fell into recession in 2014 due to the European debt crisis and China’s economic slowdown. This decline had a negative impact on the Nigerian economy, resulting in a reduction in demand for Nigerian exports.
2. Oil prices fall: Nigeria’s main export product is oil. experienced significant price declines in 2014. This decline has resulted in a sharp reduction in revenue for the Nigerian government, making it difficult to fund the national budget.
3. Naira Devaluation: Nigeria’s currency, the naira, devalued in 2014, making it more expensive for Nigerians to import goods and services and causing inflation.
4. Uncertainty: Nigeria is undergoing a political transition in 2014. Goodluck Jonathan, who has been president since 2010, is seeking re-election but faces a strong challenge from Muhammadu Buhari of the All Progressives Congress (APC). This uncertainty makes corporate interest in investing in Nigeria challenging.
Emefiele’s appointment raised questions as he was a controversial choice for the position. Despite his reputation as a technocrat, his lack of prior experience in the central bank raised concerns. He was seen as a political appointment, closely tied to then-President Goodluck Jonathan.
Emefiele’s tenure began with numerous challenges, including a drop in crude oil prices, which drastically reduced Nigeria’s foreign exchange reserves. In response, Emefiele introduced unconventional monetary policies, such as a multiple exchange rate system and import bans on certain commodities. These policies depleted the country’s dollar reserves and necessitated restrictions on international transactions. The situation was dire.
I would not call Emefiele corrupt, but rather that he underperformed in the important role he was given. To his credit, he implemented some laudable policies. However, his shortcomings overshadowed his achievements, as his policies regarding foreign exchange reserves and exports inadvertently led Nigeria to become a leading country in cryptocurrency adoption.
Prior to his removal, Godwin Emefiele had been critical of cryptocurrencies, arguing that they posed a threat to Nigeria’s financial system. In February 2021, the Central Bank of Nigeria issued a circular requiring all financial institutions, including exchanges, to close accounts related to cryptocurrency transactions.
The decision is intended to reduce potential risks and illegal activities associated with cryptocurrencies. Concerns over money laundering, terrorist financing, and lack of regulatory oversight in the crypto space influenced the central bank’s stance. The CBN warned Nigerians against investing in cryptocurrencies, highlighting their lack of legal tender status and central bank backing.
As a result, Nigerian citizens have limited exposure to cryptocurrencies as banks and financial institutions adhere to the directives of the central bank. Cryptocurrency exchanges face challenges in providing services, prompting individuals to turn to peer-to-peer platforms or over-the-counter exchanges to trade cryptocurrencies.
The central bank's warnings were strict. Those who refused to adapt to the rules had their bank accounts frozen.
I believe that Emefiele’s stance on cryptocurrencies stifles innovation and hinders Nigerians’ access to new financial technologies. Nigeria has the potential for economic growth with a young population and huge potential. Why would the government want to prevent such progress? Alternatively, Emefiele may be trying to protect Nigeria’s financial system from the risks associated with cryptocurrencies.
However, these policies had consequences, prompting Nigerians to react quickly. Faced with the impending devaluation of the naira and rising inflation, Nigerians sought refuge in stablecoins.
The rush for stablecoins has ensued. The governor of the Nigerian central bank even had to address the issue on national television. The naira is rapidly losing value in the economy, and remittances are shrinking. On the black market, the naira's exchange rate has fallen from 360 naira to 1 dollar to 640 naira to 1 dollar.
The informal Nigerian foreign exchange market is on the rise, with peer-to-peer transactions common across the country.
P2P
When Mark Zuckerberg acquired WhatsApp, the way he initially expected it to be used was not the way Nigerians would use it. In Nigeria, WhatsApp is more than just a messaging app, it is also a powerful business and commerce platform. With integrity, determination, and effective brand marketing, Nigerians have managed to build thriving businesses through WhatsApp on their phones.
My country has a large number of informal and formal peer-to-peer (P2P) businesses. Patricia, Velox and Jetpay are the largest, but there are hundreds, if not thousands, of them.
In Nigeria, P2P operations are conducted within a tight framework of trust, generally through personal acquaintances or relationships. Most people limit themselves to trading with people they know. And these daily transactions are very large.
As Bitcoin.com reports, “Bitcoin trading volume in Nigeria reached almost $400 million in the first half of 2022, according to peer-to-peer crypto trading platform Paxful. Combined with 2021’s $7.6 billion in trading volume, this means the West African country is now the world’s largest cryptocurrency trading market.”
As a Nigerian, I can boldly tell you that these reported figures underestimate the true extent of market activity, given the inadequacy of their data collection.
These P2P merchants are the lifeline of the entire cryptocurrency industry in Nigeria. Since banks cannot process cryptocurrency transactions, anyone who wants to acquire stablecoins or other cryptocurrencies must rely on these P2P merchants.
In Nigeria, stablecoins dominate. They are more popular than volatile cryptocurrencies like Bitcoin or Ethereum. While Nigerians do invest in cryptocurrencies, buying Bitcoin or Ethereum is a trade for the potential of making greater profits.
Nigerians also love memecoin. We have dedicated P2P merchants for this. It’s all based on the mentality of low prices. The average Nigerian crypto user prefers to invest $50 in memecoin, own billions or even trillions of tokens, and hope to make a killing if it eventually reaches $1 or even $0.001 per token.
P2P vendors cater to these users and charge high fees.
One of the biggest hurdles facing the Nigerian cryptocurrency industry is the regulatory environment and its potential impact. How can we use the traditional banking system without raising concerns? Currently, any mention of cryptocurrency in a bank transaction note in Nigeria can result in an account being frozen. Some of my friends have had their accounts frozen simply because someone mentioned “bnb”.
The government is the main obstacle to the integration of stablecoins into Nigeria’s financial infrastructure. Cryptocurrencies are already widely accepted in Nigeria, but the government decided to launch its own digital currency, called eNaira.
eNaira
As a Nigerian who is deeply involved in the world of cryptocurrency, I am extremely disappointed with the performance of eNaira.
Launched in October 2021, this central bank digital currency (CBDC) was much anticipated and was intended to transform the Nigerian financial landscape. However, the reality proved to be far from that, leaving me and many others disappointed and frustrated.
On the contrary, the intention of eNaira was to reduce reliance on cash, but ironically, the digital currency has seen a surge in cash usage. It became apparent early on that Nigerians did not see a reason to embrace digital currency, with cash, with its widely accepted and familiar features, offering convenience without the need to switch to the digital realm of eNaira. Furthermore, the government’s poor promotion and publicity of eNaira only contributed to its low popularity.
But beyond these practical aspects, there are deeper suspicions among the people about eNaira.
As someone who had eagerly anticipated the launch of eNaira, hoping it would bring positive change to Nigeria’s financial sector, the subsequent disappointment hit me hard. It taught me the importance of managing expectations and understanding that even well-intentioned initiatives can fall short of their goals.
Witnessing the failure of eNaira firsthand gave me a deep appreciation for the complexity of introducing new digital currencies. It highlighted the importance of thorough research, planning, and most importantly, listening to the concerns and preferences of those who will be affected by these innovations. I learned that technological advancements alone are not enough to drive adoption; effective communication, education, and trust-building initiatives are all critical to gaining public support.
eNaira’s lackluster performance highlights the importance of understanding the social and cultural factors that shape financial behavior. Cash use remains prevalent because it provides familiarity and convenience, and this experience has deepened my understanding of the importance of addressing these issues and tailoring programs to people’s unique contexts and needs.
Looking back at the journey of eNaira, I realised that promoting new financial technologies requires a holistic approach that includes technical implementation, public engagement, and careful consideration of social and economic dynamics. This taught me a valuable lesson: real innovation must start with the reality of the people it serves, transparent communication and meaningful engagement, and must earn their trust and confidence.
eNaira made me realize that even with the best intentions, there is no guarantee of transformational change. It urged me to approach innovation with a certain level of realism and to keep in mind the complexities and challenges that lie ahead.
The shortcomings of eNaira serve as a cautionary tale not only for Nigeria, but for any country considering introducing a CBDC. It is important to understand that such digital currencies cannot simply replace cash or solve all financial problems overnight. Governments must truly listen to and cater to the needs and preferences of their citizens before undertaking such an attempt.
Unfortunately, Nigeria only had to learn this lesson through the failure of eNaira.
My personal thoughts on the uncertainty of the future of cryptocurrency in Nigeria:
As a staunch supporter of cryptocurrencies, I find myself caught up in the uncertainty regarding their future in Nigeria.
Central bank bans on cryptocurrency trading have sparked a backlash from the public, including me, who see cryptocurrency as a lifeline, a means of protecting our hard-earned wealth from the ravages of inflation and economic instability.
If the Central Bank lifts the ban, it could usher in a new era for the Nigerian economy. I firmly believe that cryptocurrency has the ability to enhance financial inclusion and provide access to vital financial services to the countless Nigerians who are underserved by the traditional banking system. In addition, it can also reduce the associated remittance costs. It will particularly reduce the burden on families who rely on international remittances.
Hope is flickering on the horizon as Nigeria welcomes a new president who is sympathetic to the cause of cryptocurrencies. Even amid the ongoing ban, the president has enacted new crypto tax laws, demonstrating a willingness to work with the crypto community. At this point, I believe that re-evaluating the entire regulatory framework regarding cryptocurrencies would be a step in the right direction. This would create a conducive environment for growth.
The 10% tax remains a significant barrier to formal participation in cryptocurrencies for the average Nigerian. Many of us are struggling. Many still prefer to trade cryptocurrencies through informal P2P channels rather than paying the 10% tax. It is critical that the government recognizes the potential of cryptocurrencies and considers reducing the tax rate to encourage formal investment and promote financial inclusion.
The future of cryptocurrency in Nigeria hangs in the balance, affected by the central bank ban and the internal struggles within the crypto market. As I witness the impact this ban has on our community and the economy at large, I can’t help but ponder the effectiveness of these measures and their long-term impact on the Nigerian financial landscape.
The fate of cryptocurrency in Nigeria is closely tied to our desire for a more inclusive and prosperous future.