The fire of cryptocurrency is burning stronger than ever in the hearts of Nigerian youths six months after the Central Bank of Nigeria (CBN) asked Deposit Money Banks (DMBs) and Other Financial Institutions (OFIs) to stop processing payments of the coins through their platforms. Amarachi Oraekelam, Jude Anselm Nwodo, and Temitope Aborisade are youths who witnessed the financial freedom that trading and investing in cryptocurrency bestowed before the CBN’s ban. On February 2, 2021, the CBN stopped DMBs and OFIs from using their systems to process cryptocurrency payments.
Later on, CBN governor, Godwin Emefiele, in a press conference described cryptocurrency as “money created out of thin air” in “an electronic dark world” which was “opaque, black and not visible”. According to him, the currency was “scary enough to create anxiety for any regulator or central bank”.
This action drew criticism far and wide even from the Vice President, Yemi Osinbajo. Oraekelam who is in her 20s, trades Bitcoin and Ethereum, she said after the ban she had to adjust from the usual mode of buying coins through her debit card and adopt the Person to Person (P2P) model of trading. For Oraekelam, the ban was birthed by fear since the CBN could not control or dictate the actions of traders. Oraekelam said, “Before the ban, people were using their ATM cards to buy a certain amount of crypto and then the money was deducted from the bank in exchange for the coins. What I and others did (after) was to adopt the P2P (Person to Person) trading and people dumped the idea of using ATM (cards) to buy crypto directly.” Nwodo had similar experiences with Oraekelam. After the ban, cryptocurrency exchange platforms like Binance banned transactions from Nigeria and he was one of the multitude affected. Though the ban happened in February 2021, it was not until March that Binance introduced P2P on its platform, before then, Nwodo and Oraekelam saw people get defrauded by potential sellers of coins, for them this killed trust and good faith. “Yes, the ban affected me,” Nwodo said.
“I couldn’t buy coins directly using my ATM card. Binance first stopped allowing transactions and then other exchanges restricted people in) Nigeria from buying crypto. Towards the end of March, Binance activated P2P. It was hard (before then) getting someone who would sell coins to you quickly unlike before.” “I know students who sent money to random people online and instead of that person to send them the coins, he’d block them on WhatsApp or the social media platform where they settled the transaction,” he added. “It gave way to a lot of fraud.” For Aborisade, the ban stopped him from making smart decisions when it came to investments. He said that he usually made transactions armed with information about the coins likely to “bump or dip” but after the ban, he could not make those transactions as soon as he needed to make them.
The bank account of a friend was also frozen due to transactions he made in the past. For these Nigerians, the CBN’s ban stinks of hypocrisy. Oraekelam pointed out that if the bank was going to unveil its digital currency there was no need to ban transactions of other cryptocurrencies in the country. Last month, the CBN said it was going to launch its own digital currency on October 1, 2021. El Salvador’s adoption of Bitcoin as a legal tender has sparked conversations about the importance of cryptocurrency to developing countries like Nigeria. El Salvador’s President, Nayib Bukele, said that adopting Bitcoin was a good choice for the country since it assisted citizens and did not cause harm to anyone. He also said that any objection to this decision must be politically motivated.
Cryptocurrencies’ downsides for Nigerians
Traders and investors house certain fears in mind as they conduct their business. In June, AfriCrypt, a South African cryptocurrency investment platform shut down and investors lost approximately $3.6 billion in Bitcoin. This incident has been reported as a scam which meant that people have now lost $3.6 billion to people who cannot be traced and have a low possibility of getting caught and brought to justice. “Crypto is actually a very big risk and I accept whatever is going to come,” Nwodo said. He has adopted the use of hardware wallets to reduce the risk of losing money if a shutdown should happen. “We dread bad days like that when an exchange will just shut down and make away with people’s money. That’s why we are advised to make use of hardware wallet,” he said. Aborisade has had a bumpy ride while investing in cryptocurrencies. “My crypto journey is more like a zigzag. It is not a smooth journey, there are ups and downs,” he said, “it is not a get-rich-quick scheme and requires a lot of patience.”
‘The future is bright’
Despite the ugly sides of trading in bitcoin and other digital coins, these Nigerians all agree that the future of cryptocurrency in Nigeria is bright. They might be close to the truth. Last May, barely three months after the ban, Paxful, an exchange platform, said that Nigeria traded $2.4 billion worth of cryptocurrency, up from $684 million traded last December which shows that if the ban did anything in the country, it was of added advantage to the market. Oraekelam is not surprised though. She said the ban “opened the eyes” of Nigerians to the world of cryptocurrency where fiat currencies were not the star of the show. “The ban made cryptocurrency more popular in Nigeria. This is usual with things that are banned,” she said, “people that did not even know what cryptocurrency was began asking questions about it and the information was out there. People also wondered why the government was paying much attention to cryptocurrency when Nigeria had other issues that needed attention.” Nwodo said, “The future is bright. Towards the end of May (2021) a lot of Nigerians joined the wagon. If you go online, you see people talking about cryptocurrency and a high percentage of (Nigerian) students are learning about it.” Aborisade agrees with them. “Yes, the ban increased its popularity. People that didn’t know about it before found out about it then,” he said. “I believe the future of crypto is bright. It is the transition and the fear of the unknown that will affect people.” He also believes this fear will eventually fade out.