According to a new report, approximately 33.4 million Nigerians, or 35% of the country’s adult population, are holders of cryptocurrencies or have traded them in the past six months. The report attributes the growing adoption of cryptocurrencies to rising inflation and the plunging value of the local currency.
Converting From Fiat to Crypto via P2P Platforms
A new report by the cryptocurrency exchange Kucoin has found that 35% of Nigerian adults, or 33.4 million people aged between 18 and 60, are holders of cryptocurrencies or have traded the same in the past six months. The report also says about 52% of Nigerian cryptocurrency investors “allocate over half of their assets to cryptocurrencies.”
As noted in the crypto exchange’s report, about 65% of Nigerian crypto investors are known to convert from fiat to cryptocurrency via peer-to-peer (P2P) trading platforms. The increased use of peer-to-peer platforms by Nigerian crypto investors suggests many financial institutions are adhering to the requirements of a directive that was issued by the Central Bank of Nigeria (CBN) in February 2021.
In this directive, the CBN told financial institutions to block or freeze bank accounts that are associated with crypto entities. As shown by a recent Bitcoin.com News report, financial institutions caught facilitating transactions on behalf of known cryptocurrency entities will be penalized by the CBN. In addition to the directive, central bank officials including the governor, Godwin Emefiele, have warned Nigerians against dealing in cryptocurrencies.
Naira Depreciation
Despite the warnings by the governor and others, however, the study findings suggest Nigerians are in fact planning to increase their investments in crypto. The report states:
Another important finding is that 70% of Nigerian crypto investors intend to increase their cryptocurrency investments over the next 6 months.
Meanwhile, the study points to the plunging value of the naira currency as one of the reasons behind the accelerated adoption of cryptocurrencies by Nigerians. The report said in the past six years alone, the naira has depreciated by 209% and this is the reason why 37% of respondents began investing in cryptocurrencies three years ago. This figure is significantly higher than the 6% of adults that invested six years ago.
The Covid-19 pandemic is also named in the report as the other factor that prompted 26% of the respondents to invest in cryptos in the past six months.
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