Nigeria is one of the countries with one of the most crypto-friendly populations amid the FTX collapse. The citizens of Africa’s largest country have remained unwavering in their support for digital assets despite the government’s attempts to obstruct that by outright making crypto trades illegal.
Despite the recent market dip and the demise of one of the world’s biggest Crypto exchanges, a number of Nigerians are still crypto asset owners this year.
FTX served as a bank to numerous cryptocurrency businesses and average consumers, offering an 8% yearly interest rate on the stablecoin kept on the platform. It was the ideal marketing strategy needed to bring on a number of consumers in Africa and compete with Binance, the largest cryptocurrency exchange in the world by volume, for market share.
Before going out of business, FTX was able to sign up more than 100,000 consumers in Africa. These consumers used FTX to convert their native currencies to dollars and increase the yield on their savings in addition to trading on the platform. FTX processed billions of dollars each month and intended to open an office in Nigeria before this month’s collapse of the once $32 billion crypto juggernaut.
It had a small number of Nigerian full-time employees working remotely and a contract team of roughly a few dozen of campus and trading ambassadors who shared the SBF message at college-wide activities with everyone interested was crucial to bring in these numbers after only a few months in the area.
However, many of them, including local celebrities hired as brand advocates, are now regretting their choice in light of the recent events that led to FTX’s decline.
While cryptocurrency firms are suffering their own losses, a number of Nigerian crypto fans who traded various coins on FTX-affiliated platforms have been unable to withdraw their deposits. The collapse of FTX has forced Nigerian web3 startup Nestcoin, which is run by former Binance Labs head Yele Bademosi, to fire staff.
The events of the previous week affected us because we kept our assets (cash and stablecoins) with FTX. As a business, we must revise our plans and strategy. Sadly, this means bidding farewell to some of our extremely talented Nesters,” Bademosi remarked.
Finder’s most recent research on cryptocurrency acceptance and ownership, Nigeria has the second-highest percentage of Bitcoin owners as of October, at 48%, up from 16.1% in the same month the previous year.
In addition, Nigeria ranked as the top country for crypto adoption in Africa and 11th overall, Nigerians are considered to be the most crypto-savvy people on the African continent. In 2023, 35% of Nigerians between the ages of 18 and 60 declared owning or trading cryptocurrencies.
Nigeria is now ranked eleventh on Chainalysis’s list of “Global Crypto Adoption Index” countries. Despite the fact that the current bear market has been ongoing for a while, the populace has chosen to continue with cryptocurrencies.
Young people in Nigeria are increasingly looking at cryptocurrencies like Bitcoin as a viable alternative to gold, the oldest and most well-established safe-haven asset. A number of young people who invested in the crypto market during price increases tend to stay even when prices decline, according to data gathered by Chainalysis. This allows the ecosystem to grow continuously on the internet during various market cycles.
The upsurge comes despite CBN’s instruction that all commercial banks to close the accounts of crypto exchanges and any other companies operating in the country that conduct cryptocurrency transactions as part of the restriction.
Young Nigerians’ reluctance to save in naira-denominated assets may also be influenced by the central bank’s difficulties to keep the naira’s value stable; since 2015, the currency has undergone six devaluations, and economists predict that next year’s inflation will cause another 20% loss in value.
This has caused a shortage of dollars in the nation, forcing the central bank to ration foreign exchange on the main market. As a result, citizens are now forced to use crypto assets and the more expensive parallel market. Since eNaira does not support any of these fundamental use cases, its poor adoption rates thus far are not surprising. After filing for bankruptcy on Nov. 11, Bankman-Fried is now looking for funds to cover $8 billion in withdrawal requests, but it will be a tough ask for investors who now feel cheated.