Cryptocurrency became a lifesaver, the true story of an early crypto user in Nigeria

Original Author: KYRIAN

Compile: LlamaC

![Cryptocurrency becomes a life-saving straw, a true story of an early crypto user in Nigeria] (https://img-cdn.gateio.im/resized-social/moments-69a80767fe-67fec64eef-dd1a6f-7649e1) (Portfolio: FORM 2016, About Tomo: Illustrator of eth Foundation)

I am Nigerian and stablecoins are my lifesaver.

I am Nigerian and Nigeria is my beloved country.

my story

Nigeria presents a picture of breathtaking diversity and limitless potential, a land of hope and possibility. With a population of over 200 million, it is the most populous country in Africa and the seventh most populous country in the world. Additionally, Nigeria has the largest economy in Africa with a GDP of over US$400 billion.

Over 250 different ethnic groups live within Nigeria, each maintaining its own unique language, culture and heritage. This unique diversity is the source of our national strength, giving our country a vibrant and colorful cultural fabric.

I came from an ordinary family with no privileges and no luxuries.

My family embodies the resilience and resourcefulness found in many Nigerian families. Although we are never short of the necessities of our daily life, we are always hanging on the edge of uncertainty, and one wrong decision may disrupt the rhythm of our daily life. Like so many Nigerian families, we live under the constant shadow of financial stress, are vulnerable to serious illness and are often on the brink of collapse.

I have witnessed firsthand the tireless efforts of parents to protect us from these dangers. This experience convinced me that I had to work as hard as they did, if not harder. In 2018, I completed my secondary education with this mindset.

Eager to become a responsible young man, I quickly searched for opportunities to support myself financially and reduce the burden on my parents. Not just for food and clothing, but the disgust of being constantly dependent on others for one's own personal needs. Gradually, accepting a weekly allowance became more and more unbearable for me.

It was this bone-deep pain that led me to the world of cryptocurrencies.

Everyone has a unique story before going down the rabbit hole of this industry. For me, I am not driven by a deep love for this technology, but simply by my urgent need to survive and hope to achieve financial freedom in the long run.

My experience was very interesting. But first let me explain the role of Nigerians in the WhatsApp community. For Nigerians, it is a virtual network. People look for tutors on WhatsApp and tutors add them to groups to teach different skills or mentor their own business.

It was this situation that led me into the world of cryptocurrencies. I woke up one day to find I had been added to a WhatsApp group promising to set people up for financial freedom by teaching about cryptocurrency trading. At first, I dismissed it as a scam as usual. Later, I decided to stay a little longer and have a look. After all, it's free and I have nothing to lose.

Fate has prepared a different arrangement for me. This is not a scam; the instructors are serious about imparting knowledge. But the course is divided into two stages: the first stage is free, and the second stage requires payment. As the saying goes, there is no free lunch, even in the free virtual world.

In the initial stages, I delved into the basics of the cryptocurrency industry, which really piqued my interest. It has seared its mark on my heart and I believe it is my path to true financial freedom. Back then, my focus wasn't on the technology, but on the promise of total financial freedom.

However, at the time I was a poor student about to enter university and no one was funding my journey, not even my parents. So, as a discerning Nigerian, I did what we do best - work hard to make money.

With my hard work, I eventually stumbled upon Binance's AMA (question answer) session, which introduced me to the technicalities of cryptocurrencies. At the time, Binance held weekly AMAs with emerging projects, and the session rewarded those who asked relevant questions afterwards. While most people think of this as a routine activity, for me it felt like the only opportunity to fund my crypto journey and I took it very seriously. This marked the birth of my passion for cryptocurrency research. I had to familiarize myself with each item that appeared in the AMA session in order to ask the most relevant questions.

Over time, I started winning some AMA awards. Soon, my net worth was close to $1,000 (about 360,000 naira). Even my parents, especially my mom, started to take my new hobby seriously. Occasionally she would spare me from going to the market with her or allow me to come home late so long as I focused on my research.

However, over time, I noticed a change in the pace of my financial growth. By mid-2019, my net worth was no longer growing as fast as it used to be. The exponential rate of growth I was used to started to plateau. Although I made more money, I found that the value of the Naira did not rise proportionally.

Stablecoins

You see, every time I earn money at an AMA event, I convert it into naira. Whenever I need USD for a crypto transaction, I convert it back. The exchange rate kept going up and no matter how much money I made, it was eating away at my net worth. It was at that moment that I realized that things were going to get worse for Naira.

The harsh realities of inflation and currency devaluation were laid out in front of me, and my eyes were opened to how the foreign exchange market works.

I knew something had to change, and I worried that I would be plunged into extreme poverty again. My apprehensions had me swapping my entire net worth into USD stablecoins, and I didn't want to experience the pain of each time I swapped my Naira for stablecoins, it became less worthless.

If I feel this way, many Nigerians must feel the same way. I am not alone.

Nigeria is a country of contrasts, beauty and ugliness, wealth and poverty, hope and despair. Still, the resilience of the people remains steadfast, striving to create a better future for themselves and their children and grandchildren.

Nigeria has a history of instability and corruption, but it is a democracy with a vibrant civil society.

In this contrasting field, Godwin Emefiele became Governor of the Central Bank of Nigeria (CBN) on June 4, 2014.

Corruption continues to plague Nigeria, tarnishing its reputation and hindering progress on many fronts. It has penetrated into all levels of society, causing serious adverse effects. The corrupt influence of Emefil's governorship has dampened Nigeria's growth.

Godwin Emefiele's succession as Governor of the Central Bank of Nigeria (CBN) marks an important moment in the country's economic sector. Appointed by former President Goodluck Jonathan in 2014, Emefiele assumed the position at a critical time of significant economic challenge and uncertainty.

These challenges include:

1. Uneven global economic recovery: In 2014, the global economy fell into recession due to the European debt crisis and the slowdown of the Chinese economy. This decline has had a negative impact on the Nigerian economy, resulting in less demand for Nigerian exports.

2. Lower oil prices: Nigeria's main export product - oil. It experienced a significant price drop in 2014. This decline has led to a drastic reduction in the Nigerian government's revenues, making it difficult to fund the state budget.

3. Devaluation of the Naira: Nigeria's currency, the Naira, devalued in 2014, resulting in higher costs for Nigerians to import goods and services and causing inflation.

4. Uncertainty: Nigeria is undergoing a political transition in 2014. Goodluck Jonathan, president since 2010, is seeking re-election but faces a strong challenge from Muhammad Buhari of the All Progressive Congress Party (APC). This uncertainty makes corporate interest in investing in Nigeria challenging.

Emefiele's appointment has raised questions because he was a controversial choice for the post. Despite his reputation as a technologist, his lack of previous central banking experience has raised concerns. He was seen as a political appointee, closely associated with then-President Goodluck Jonathan.

Emefiele's tenure began with numerous challenges, including a drop in crude oil prices that slashed Nigeria's foreign exchange reserves. In response, Emefiele introduced unconventional monetary policies such as multiple exchange rate regimes and import bans on certain commodities. These policies deplete the country's dollar reserves and must limit international transactions. The situation is dire.

I wouldn't call Emefiele corrupt, but rather that he underperformed in the important role he was given. To his credit, he has implemented some laudable policies. However, his shortcomings overshadowed his achievements, as his policies on foreign exchange reserves and exports inadvertently helped make Nigeria a leader in cryptocurrency adoption.

Before being fired, Godwin Emefiele had been critical of cryptocurrencies, arguing that they posed a threat to Nigeria's financial system. In February 2021, the Central Bank of Nigeria issued a circular requiring all financial institutions, including exchanges, to close accounts related to cryptocurrency transactions.

The purpose of this decision is to reduce the potential risks and illegal activities associated with cryptocurrencies. Concerns about money laundering, terrorist financing, and a lack of regulatory oversight in the crypto space have influenced the central bank's stance. The CBN warned Nigerians against investing in cryptocurrencies, highlighting their lack of legal tender status and central bank backing.

As a result, Nigerian citizens have limited access to cryptocurrencies as banks and financial institutions follow the central bank’s directives. Cryptocurrency exchanges face challenges in providing services, driving individuals to turn to peer-to-peer platforms or over-the-counter exchanges for cryptocurrency trading.

The central bank's warning is strict. Those who refused to comply had their bank accounts frozen.

In my opinion, Emefiele's stance on cryptocurrencies inhibits innovation and hinders Nigerians' access to new financial technologies. With a young population and great potential, Nigeria has the potential for economic growth. Why would the government want to prevent such progress? Alternatively, Emefiele may have wanted to protect Nigeria’s financial system from the risks associated with cryptocurrencies.

However, these policies had consequences, prompting Nigerians to react swiftly. Faced with an impending devaluation of the naira and rising inflation, Nigerians have sought refuge in stablecoins.

Then came the chase for stablecoins. The governor of the Nigerian central bank even had to address the issue on national television. The naira is rapidly depreciating in the economy and remittances are shrinking. On the black market, the naira exchange rate fell from 360 naira to the dollar to 640 naira to the dollar.

This unofficial Nigerian forex market is on the rise, and it's a peer-to-peer trade that's ubiquitous across the country.

P2P

When Mark Zuckerberg bought WhatsApp, the way he initially envisioned it wasn't the way Nigerians used it. In Nigeria, WhatsApp is not just a messaging app but a powerful business and business platform. With integrity, determination and effective brand marketing, Nigerians have successfully built thriving businesses through WhatsApp on their mobile phones.

My country has numerous informal and formal peer-to-peer (P2P) businesses. Patricia, Velox, and Jetpay are some of the biggest, but there are hundreds if not thousands more.

In Nigeria, P2P operations operate within a tight framework of trust, generally established through personal acquaintances or relationships. Most people are limited to transacting with people they know. And these daily transactions are very large.

As reported by Bitcoin.com, “According to data from peer-to-peer crypto trading platform Paxful, Bitcoin trading volume in Nigeria reached almost $400 million in the first half of 2022. Combined with the $7.6 billion volume in 2021, this means The West African country is now the world’s largest cryptocurrency exchange market.”

**As a Nigerian, I can boldly tell you that these reported numbers underestimate the true extent of market activity, given their lack of data collection. **

**These P2P merchants are the lifeblood of the entire cryptocurrency industry in Nigeria. **Since banks cannot process cryptocurrency transactions, anyone who wants to acquire stablecoins or other cryptocurrencies must rely on these P2P merchants.

In Nigeria, stablecoins dominate. They are more popular than volatile cryptocurrencies like Bitcoin or Ethereum. While Nigerians do invest in cryptocurrencies, buying Bitcoin or Ether is a transaction for potentially greater profits.

Nigerians also love memecoin. We have dedicated P2P merchants for this purpose. It's all based on a low-price mentality. The average Nigerian cryptocurrency user prefers to invest $50 in memecoin, owning billions or even trillions of tokens, hoping to make a fortune if they end up at $1 or even $0.001 per token.

P2P vendors cater to these users and charge exorbitant fees.

One of the biggest hurdles facing the cryptocurrency industry in Nigeria is the regulatory environment and its potential impact. How can we use the traditional banking system without causing concern? Currently, any mention of cryptocurrencies in Nigerian bank transaction notes can lead to account freezing. Some of my friends had their accounts frozen just because someone mentioned "bnb".

The government is the main obstacle to the integration of stablecoins into Nigeria's financial infrastructure. Cryptocurrencies are already widely accepted in Nigeria, however the government has decided to launch its own digital currency called eNaira.

eNaira

As a Nigerian deeply involved in the world of cryptocurrencies, eNaira's performance has disappointed me.

Launched in October 2021, the once-highly anticipated central bank digital currency (CBDC) aims to change Nigeria's financial landscape. However, reality has proven to be far from it, leaving me and many others disappointed and frustrated.

Instead, eNaira’s intention was to reduce reliance on cash, but the digital currency has, ironically, seen a surge in cash usage. It became clear early on that Nigerians did not see a reason to embrace digital currencies, and that cash, with its widely accepted and familiar features, offered convenience without the need to switch to eNaira's digital realm. Also, the government's ineffectiveness in promoting and publicizing eNaira has only contributed to its low popularity.

But beyond these practical aspects, there is a deeper suspicion of eNaira.

As someone who had eagerly anticipated the launch of eNaira, hoping it would bring about positive change in the Nigerian financial sector, the subsequent disappointment hit me hard. It taught me the importance of managing expectations and understanding that even well-intentioned initiatives can fall short.

Witnessing the failure of eNaira first-hand gave me a deep appreciation for the complexities of introducing a new digital currency. This highlights thorough research, planning, and most importantly, listening to the concerns and preferences of those who will be affected by these innovations. I learned that technological advancement alone is not enough to drive adoption; effective communication, education, and trust-building initiatives are all critical in order to gain public support.

eNaira's lackluster performance underscores the importance of understanding the social and cultural factors that shape financial behavior. Cash use is still prevalent because of the familiarity and convenience it provides, and this experience has deepened my understanding of the importance of addressing these issues and tailoring programs to people's unique backgrounds and needs.

Looking back on eNaira's journey, I realize that rolling out new financial technologies requires a holistic approach, including technical implementation, public engagement, and careful consideration of social and economic dynamics. This led me to a valuable lesson: true innovation must start with the reality of the people it serves, and transparent communication and meaningful engagement must earn their trust and confidence.

eNaira made me realize that even with the best of intentions, transformational change is not guaranteed. It urges me to have a certain realism in the face of innovation later on, with the complexities and challenges ahead in mind.

The inadequacy of eNaira is a cautionary tale not only for Nigeria, but for any country considering introducing a CBDC. What needs to be understood is that this digital currency cannot replace cash or solve all financial problems just overnight. Governments have to really listen to and cater to the needs and preferences of their citizens before attempting something like this.

Unfortunately, Nigeria can only learn this lesson through the failure of eNaira.

My personal take on the uncertain future of cryptocurrencies in Nigeria:

As a staunch supporter of cryptocurrencies, I find myself in the midst of uncertainty about their future in Nigeria.

Central bank bans on cryptocurrency trading have sparked a public backlash, including me. We see cryptocurrencies as a lifeline, a means of protecting our hard-earned wealth from the ravages of inflation and economic instability.

If the central bank lifts the ban, it could usher in a new era for the Nigerian economy. I firmly believe that cryptocurrencies have the power to enhance financial inclusion and provide access to vital financial services to the countless Nigerians who are not served by the traditional banking system. Additionally, it can reduce the associated remittance costs. It will especially ease the burden on families dependent on international remittances.

Hope flickers on the horizon as Nigeria welcomes a new president who is sympathetic to the cryptocurrency cause. Even with the ongoing ban, the president has enacted a new cryptocurrency tax law, showing a willingness to work with the crypto community. At this point, I think reassessing the entire regulatory framework around cryptocurrencies would be a step in the right direction. This will create a conducive environment for growth.

For ordinary Nigerians, the 10% tax rate remains a significant barrier to formal access to cryptocurrency participation. Many of us struggle. Many people still prefer to transact crypto through informal P2P channels rather than paying the 10% tax. It is critical that governments recognize the potential of cryptocurrencies and consider reducing tax rates to encourage formal investment and promote financial inclusion.

The future of cryptocurrencies in Nigeria hangs in the balance, reeling from a central bank ban and internal struggles in the crypto market. As I witness the impact of this ban on our community and the economy as a whole, I cannot help but think about the effectiveness of these measures and their long-term impact on the Nigerian financial landscape.

The fate of cryptocurrencies in Nigeria is closely tied to our desire for a more inclusive and prosperous future.