Nigerians still adore crypto, particularly Tether’s USDT, a United States dollar-pegged stablecoin and Bitcoin. This outcome entails the most recent analysis by Chainalysis, a research group, concerning cryptocurrency adoption.
Over the past two years, crypto utilization rose 9%, resulting in Africa’s most populated nation being one of the six nations globally where transaction volumes increased within that time frame.
Crypto Adoption Surges in Nigeria
It might be surprising for the recent uptick to happen amidst a crypto bear market. However, since June, the Naira, the country’s fiat currency, has lost 65% of its value to the United States dollar.
This happened when the nation’s Central Bank opted to float this currency. Firms and homes dealing with the fallout are shifting to Bitcoin and stablecoins to ease payments and protect their prosperity.
According to Bisola Asolo, the co-founder and chief executive officer of Super, a web3 billing platform, referred to the stablecoins as ‘crypto’s killer app for Africa.’ He told the media that stablecoin adoption’s basis lies in the awareness of offering a better vehicle for safeguarding people’s wealth than their currency.
Additionally, Binance, the globe’s major crypto exchange with a trading volume of $19.7B, provides a reasonably straightforward path for citizens to access crypto and USDT.
Chainalysis revealed that between August 2021 and July this year, Nigerian exchanges’ stablecoin transactions recorded $60B.
High Inflation Fuelling Naira Value to Plummet
In Nigeria, increasing inflation and reduced Naira’s value appear to propel the flight to safety. Floating the Naira, which involved allowing the market to make its price, complicated an already unpredictable state.
According to Rume Ophi, the Stakeholders in the Blockchain Technology Association of Nigeria’s executive secretary, wrong economic guidelines have affected the appalling Naira to dollar rate.
He gave an example of a person purchasing USDT some months back at 700 Naira per dollar, and currently, it is 1200 Naira per dollar. This indicates a spread of 520 Naira, and applying this to $100,000 translates to a significant amount of cash.
Firms are embracing USDT, as well as other stablecoins, to ease payments. It is not unusual to witness Nigeria’s tour operators quoting their packages in United States dollars and giving USDT as a payment alternative.
Binance Tapping to Nigeria’s Currency Vulnerabilities
According to Ophi, transferring stablecoin’s value is more accessible, and conducting business in Africa and shifting funds can be demanding. This directed crypto trading toward peer-to-peer networks provided by exchanges such as Binance.
In the meantime, Binance is leveraging the 2021 decision by the Central Bank of Nigeria to ban commercial lenders from servicing crypto exchanges. Binance’s peer-to-peer exchange rate for USDT to the Naira has made it a parallel currency market with the traditional one by Bureau De Change agents.
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