- Bitcoin prices in Nigeria are 61% higher than on exchanges like Binance at press time.
- Nigeria’s Central Bank announced the replacement of its 1,000, 500, and 200 naira notes last October.
- The apex bank restricted the amount of fiat that individuals or corporations could withdraw.
- The changes have encouraged Nigerians stranded by the current system to adopt BTC.
Bitcoin (BTC), the largest cryptocurrency by market cap, has seen a surge in demand in Nigeria amid high inflation and foreign exchange shortages.
According to recent data from Paxful, Bitcoin’s trading value has spiked to 17,181,275.6 NGN ($37,317.34) – up 131.96% in a month. Consequently, Bitcoin is currently trading at a premium of 61% in Nigeria compared with its price on exchanges like Binance, which is at $23,183.27 at press time.
Authorities in Nigeria have announced stringent policies to reduce the excesses of fiat currency through the Central Bank of Nigeria, its apex bank. In October, the bank announced that the 1,000, 500, and 200 naira notes would be replaced, making the old notes invalid.
Following this development, the government gave its citizens a deadline to return the old notes to commercial banks. Earlier, the apex bank announced January 31 as the deadline but has extended it by ten days.
As part of the policies, the apex bank drastically reduced the amount of fiat that individuals or corporate institutions could withdraw within a certain period. The government seeks to curb counterfeits, inflation, and money laundering through these measures.
Increasing Demand Driving the Hike in Bitcoin Prices in Nigeria
The newly designed notes have not been circulated to every corner of the country, thereby increasing the scarcity of cash within the economy. The development has influenced people in Nigeria who have become stranded by the status quo to increase interest in Bitcoin.
Due to the increase in this demand, the trading value of the digital coin in Nigeria began to rise beyond what is available in other countries. Peer-to-peer traders sold BTC for as high as $62,400, particularly on LocalBitcoins.
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Although BTC and other cryptocurrencies are always notable for having constant trading values across the globe, sometimes, internal factors tend to influence the trading value of cryptocurrencies in a country, making it sell at a different price from the value obtainable in other regions.
On the Flipside
- Nigeria has launched its CBDC, the e-Naira, to improve the efficiency of payments and securities settlements, domestically and internationally. However, despite the government’s efforts to promote the eNaira, less than 0.5% of the population owned it as of last October.
- Reports have recently shown that the Nigerian government is working on a bill allowing cryptocurrency usage in the country despite having implemented some strict measures against them before.
Why You Should Care
Naira’s value against USD has declined steadily for months, losing over 9% of its value in one year, and foreign exchange shortages and inflation worsened the situation. Experts say Nigerians are hedging against the drop in the value of their currency, the naira, by trading more dollar-denominated digital assets.
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