The scrappy citizens of Lagos, Nigeria are traders and can-do survivors almost by nature. Their government, however, has mismanaged the nation’s money to such a degree that it’s prone to wild devaluation swings. And while an argument could be made bitcoin too is volatile, it actually isn’t comparatively. With access to peer-to-peer exchanges such as Localbitcoins, Nigerians are revolutionizing even their traditional outdoor marketplaces, providing a financial oasis in rather dark times.
Bitcoin’s Volatility No Match For Nigeria’s Naira
“I can use Bitcoin for anything now […],” Soji, a Lagos web designer told Jeremy Kirshbaum and Pelumi Oguntemehin. “It means I can invest and also pay anybody currently, except old people, I will send them bitcoin. But some people think it is a scam to deal in Bitcoin and they also fear being hacked, as many people do not know how to protect themselves online.” Bitcoin is a handy way for Soji to gain overseas hosting services from vendors who simply won’t accept his country’s native fiat currency, Naira.
Bitcoin gets considerable flack in professional financial circles for its legendary volatility. Wild price swings can for sure occur, and have. However it is no match for Nigeria’s Naira. As Longhash explains, “Silas Okwoche is a self-taught engineer […]. He was the co-founder of a cell phone company called Nerve Mobile, which used Android smart phones from Shenzhen, China. Silas found a Chinese partner via the e-commerce platform Alibaba. Nerve Mobile’s venture was profitable for a time, but ended for a reason that had nothing to do with Silas’s product. The Nigerian Naira fell against the Chinese yuan by over 15%, and the hardware became too expensive. Silas’s story is not exceptional: Nigerian business people struggle with currency volatility every day,” the reporters insist.
Nigeria rests on the African continent at its Western curve, hugging the Gulf of Guinea, a click North of the Equator. It’s bordered by four countries to its immediate East, as a kind of horseshoe with only the South Atlantic opening West. Lagos is the largest city in Nigeria, while also boasting being the highest concentrated city in Africa. It is one of the fastest growing cities in the world, according to many estimates. It routinely ranks as the highest in African GDP, acting as a financial center and bustling port. A rather wonderful examination of Lagos can be found in Robert Neuwirth’s presentation, “The power of the informal economy,” though admittedly a bit dated.
Present day sees the broader country as lagging behind even India in extreme poverty, as CNN reports, “Nigeria has overtaken India as the country with the largest number of people living in extreme poverty, with an estimated 87 million Nigerians, or around half of the country’s population, thought to be living on less than $1.90 a day […] In Nigeria, as with other countries on the continent, that figure is projected to rise. ‘By the end of 2018 in Africa as a whole, there will probably be about 3.2 million more people living in extreme poverty than there are today,’” according to researchers. All this, and with being the largest oil producer in Africa.
Crypto as an Oasis in Extreme Poverty, Sectarian Violence
As of this writing, central Nigeria has descended into sectarian violence. Reports are sketchy, but most outlets reveal scores of people have been killed as ethnic and religious tensions rise. Fifty houses have been destroyed, if local police are to be believed. And these tensions have been brewing at least since 2013 between herdsmen and farmers.
Lagos, then, becomes a beacon of hope in a sea of economic and sectarian devastation. The settling of bitcoin in terms of price, the sideways action of recent weeks, has ironically allowed more businesspeople of Lagos to onramp into crypto. It’s also tamped down scams. “Currently, most Ponzi scheme traders are out of the market as they were only there for profit only, now that Bitcoin is stable and the profit margin is small, we will witness a gradual growth and diverse application of blockchain tech solutions,” Toyosi, investor and crypto trader, told Longhash.
Jeremy Kirshbaum and Pelumi Oguntemehin note “it is hard for a cryptocurrency to act as both a speculative asset and a currency. Countries like Nigeria that suffer from high volatility or institutional uncertainty actually need Bitcoin to act as a medium of exchange.” Traders such as Toyosi turn to remittance tokens such as Sure Remit, hoping to reduce overall costs. “Sure Remit,” they explain, “uses a cryptographic token as an alternative for sending money home from abroad. When people are using cryptocurrency for normal transactions and the value is more stable, Sure Remit can provide a more useful service.”
The key is contending with its fiat currency, Naira. Its flash devaluations add “another layer of uncertainty to businesses that purchase goods or components from abroad. That’s why Nigeria presents the perfect use case for cryptocurrencies like Bitcoin,” Longhash stresses. Another tech businessman, Temo, “works on hardware ventures and he buys his components from China. When he does this, the most convenient option is to purchase Bitcoins on Localbitcoins.com or another peer-to-peer marketplace using Naira, and then sell them for Chinese yuan. It is much faster than using normal channels, and costs a fraction of the price. If he uses a normal bank transfer, he will be charged huge fees by both the sending bank in Nigeria and the receiving bank in China. Also, it can take up to a week for the wire transfer to move the money.”
Do you think countries like Nigeria will continue to benefit from using cryptocurrency? Let us know in the comments.
Images via the Pixabay, Longhash, and Shutterstock.