How To Purchase Crypto In Nigeria? – A Complete Guide

Cryptocurrencies are, by their nature of existing in the virtual world, supposed to be accessible from any part of the world where there is internet available. However, it may be so sometimes that a few regions may impose restrictions on the exchange of fiat currency in return for an equivalent amount, in value, of a particular cryptocurrency. In this article, we will be exploring why would a country such as Nigeria carry out the practice, and what alternative routes then, does the Nigerian cryptocurrency community take in order to acquire cryptocurrencies.

In order to ensure a far better readability and communication of information, the article is going to be discussing the cryptocurrency situation in Nigeria in the following manner:

• Why Nigeria?
• How do Nigerians get their crypto now?
• Credit Cards
• Debit Cards
• P2P and how it helps.
• Nigerians Accessing Cryptocurrencies
• Benefits of Cryptocurrencies to Nigerians

Before moving to the actual bulk of the points to be discussed, it is important to provide context to why the situation in Nigeria is being highlighted in the first place. As cryptocurrencies gain in both market value and popularity day by day, their presence is something the financial industry can no longer ignore. As these financial industries are often regulated by the government of the countries these financial industries reside in, they are entities of interest of the government.

As cryptocurrencies offer the many advantages of secure quick online payments, they are being very widely adopted, however, there is a difference between cryptocurrencies and other commonly found financial assets. Many cryptocurrencies are decentralized, with most famous being Bitcoin featuring traits such as anonymity; this has raised concerns in Nigeria. Let’s discuss why.

Why Nigeria?

It isn’t just Nigeria, but rather the whole of the African continent which is seen as a potentially huge market for cryptocurrency adoption. As the entire continent is full of people who are commonly ambitious and young, imagining them switching to a virtual currency in choice of a tangible one is easy.  

Not only does Africa generally house a population which makes your ideal cryptocurrency audience, but the continent features an unfortunate increase in the costs of everyday goods. This means its residents find it difficult to go about their everyday lives with the value of cash they possess.

While this may provide enough problems on its own, put the fact that the continent has a very high number of individuals with little to no access to banking services and you start to see a very fertile soil where the roots of cryptocurrency can surely take hold.

Surely, cryptocurrencies did take hold and at the forefront of this cryptocurrency adoption trend is Nigeria. The country has a population so interested in cryptocurrency, they are responsible for the most bitcoin-related searches on Google.

This interest is not just reflected on a search engine but in practicality too. Nigeria is currently at the very top in regards to the entire African continent’s largest peer-to-peer trading volumes. With Nigeria also accounting for around 50% of all the cryptocurrency activity in the entire continent, almost $8 million worth of trades are recorded on average on famous bitcoin platforms.

So now that we have established that the idea of using cryptocurrencies is something most Nigerians would be familiar with, the question comes to why is this very article being written. Why would we want to detail the purchase of cryptocurrencies comes from the fact that the Nigerian regulators have not been too happy with the success of cryptocurrencies in the country.

The Central Bank of Nigeria restricted financial institutions such as banks through a ban on processing transactions for cryptocurrency exchanges. This means that banks would now be forced to shut their doors for services pertaining to their customers who not just trade cryptocurrencies, but buy and sell them too.

As this restriction has not directly affected the disposition of the Nigerian people towards their preference of cryptocurrencies, there has been a trend of looking for alternative ways to acquire cryptocurrencies. This is what the following part of the article is going to discuss in detail.

How do Nigerians get their crypto now?

As you have previously read, Nigerian Banks have now been asked to not service any customers’ transactions which involve cryptocurrency exchanges. This has led to a lot of Nigerians to look for alternatives.

• Credit Cards

One alternative is to buy cryptocurrencies such as the infamous bitcoin via credit cards. This mode of payment remains popular amongst Nigerians however, given the ban imposed on financial institutions by the Central Bank of Nigeria, Nigerians cannot just use any credit cards. All naira-domiciled cards are out of the list of options available to Nigerians. Naira is the national fiat currency of the country.

Hence, many Nigerians acquire international VISA and Mastercard Credit Cards. Credit Cards issued by institutions operating in countries outside the law of Nigeria will not be imposed by the ban and therefore are a method using which many Nigerians acquire cryptocurrencies. It should be noted however, that buying cryptocurrencies on their own using a credit card may not be as cost-effective as one might think.

This is due to the fact that Credit Cards, especially internationally-issued ones, charge payment processing fees which are comparatively high for the average Nigerian. This may lead to Nigerians looking for other options as well.

• Debit Cards

Coming to the use of Debit Cards for buying cryptocurrencies in Nigeria, there are the same restrictions of the Central Bank of Nigeria applicable on all transactions pertaining to cryptocurrencies using Debit cards as there were on Credit Cards as well. However, like in the case of Credit Cards, International Debit Cards are still accepted and Nigerians may prefer Debit Cards more than Credit Cards due to the fact that they have processing fees which are usually lesser than that of the ones incurred by International Credit Cards.

However, looking at both these methods, you will realize that this requires the hustle of having access to international banks and financial institutions to get an International Debit or Credit Card. The process may be difficult and is the reason why the two methods are not the most popular ones amongst Nigerians.

If you have read closely, there was indeed a statistic mentioned when establishing the fact that cryptocurrencies are well-adopted in Nigeria. That fact was that Nigeria is the country on the African continent which has the highest peer-to-peer trading volume. This may lead to a question coming in the minds of those who may not be familiar with the word peer-to-peer to P2P for short; what is P2P? How do Nigerians utilize it to gain access to cryptocurrencies?

Let’s answer these questions shall we?

P2P and how it helps

Peer-to-Peer trading or P2P for short, in this context means that the trading process is limited to two parties, one of which will be the person buying an asset while the other would be a merchant selling it. There will be a mutual agreement between the two ‘peers’, following which will allow individuals to trade.

In Nigeria, the Central Bank has imposed a ban on financial institutions processing transactions pertaining to cryptocurrency exchanges and hence, individuals cannot directly deal with the exchanges and carry out their trading activity like they once normally did. This introduces the problem to the bulk mass of the population which is interested in cryptocurrencies.

The solution they found? They must contact merchants who already have cryptocurrencies in their possession and are willing to trade them for money. Given we are discussing this under the context of Nigeria, this is highly likely to involve Naira being exchanged for some value in a cryptocurrency available.

However, to facilitate the entire process of acquiring cryptocurrencies, trading, buying or even selling them, are peer-to-peer exchanges. One key benefit which may be the decisive factor Nigerians consider explaining this method’s high popularity is that this method allows Nigerians to buy cryptocurrencies via bank transfers.

These bank transfers are made to the individual or ‘peer’ one is buying from. This is a win-win for both individuals who are interested in selling cryptocurrencies and for those who are looking to buy them. Hence, peer-to-peer exchanges allow Nigerians to carry out their trading activities involving cryptocurrencies in a way which circumvents the ban imposed by the Central Bank of Nigeria.

How do Nigerians carry such activities out? It was earlier mentioned that there exist peer-to-peer exchanges which allow individuals to gain access to other interested individuals and carry out the cryptocurrency transaction.

A good few examples of such peer-to-peer exchanges would be Binance and Bundle. These peer-to-peer exchanges allow individuals to buy and sell cryptocurrencies by initiating in a direct transaction. As this does not involve international bank institution-issued Credit or Debit Cards, this is seen as a rather cost-effective manner in which one can engage in cryptocurrency transactions.

Binance and Bundle are not the only cryptocurrency-dealing P2P exchanges or platforms Nigerians have access to. There are indeed other bitcoin marketplaces available to Nigerians which enable them to buy and sell cryptocurrencies. They include LocalBitcoins and Paxful, the former of which operates in a way which makes it highly accessible.

LocalBitcoins allows Nigerians to buy and sell the most infamous cryptocurrency of all, Bitcoins. Now while peer-to-peer exchanges may exist online which allow the entire process of cryptocurrency trading to be carried out online virtually, some Nigerians look out for the comfort of an in-person transaction. Such transactions are also preferred because of their one key feature; they allow the person to deal in cash.

Many Nigerians, getting to know the position of banks after the ban imposed by the Central Bank of Nigeria on all banking institutions, prefer to remain outside the banking sphere for all things crypto. Moreover, Nigeria is a country residing in Africa. The continent is known for the inaccessibility offered to its population in terms of banking services.

As mentioned earlier in this article, most Africans have little to no access to banking facilities. Hence it would come to no surprise that some Nigerians do not prefer bank transfers, especially when dealing with cryptocurrencies. Instead, they would enjoy the easy exchange of cash in return for some cryptocurrency, or vice versa.

Such in-cash transactions are facilitated by peer-to-peer exchanges such as LocalBitcoins. The platform allows buyers and sellers to connect and establish relations online. The LocalBitcoins service allows one to find local vendors who would be willing to accept a cash payment.

One can look for a local vendor in their preferred area and schedule a meeting where cash can be exchanged for an equivalent value in Bitcoins. This allows individuals possessing Naira to acquire Bitcoins in direct transactions. This is how individuals currently deal with peer-to-peer transactions when it comes to acquiring cryptocurrencies.

Nigerians Accessing Cryptocurrency

Up until now, we have discussed how Nigerians access cryptocurrencies using Credit Cards, Debit Cards and Peer-to-Peer exchanges. However, for an article which truly encompasses the trading of cryptocurrency in Nigeria, a general overview of how Nigerians acquire cryptocurrency regardless of what platform they use is necessary.

First decision Nigerians have to make in order to step into the world of trading cryptocurrencies is to choose a wallet. A cryptocurrency wallet is accessible by anyone who has an internet connection. Any person registering on any online exchange may be offered a cryptocurrency wallet there and then, on the platform. However, many people opt for wallets outside the platform, ones which are having private keys only they have access to, not even the exchange.

There also exist the options of hardware wallets, and wallets which can be accessed as softwares on your desktop or even mobile phones.

Secondly, Nigerians are met with the question of where to buy their cryptocurrency from. We already have discussed one of the options in great detail; one of cryptocurrency peer-to-peer exchanges. While we have stated that peer-to-peer exchanges allow individuals to negotiate their deals, schedule their meetings and so on all by themselves, there do exist a handful of other options for Nigerians.

They can access cryptocurrencies via Crypto Brokers. These brokers provide easy access to individuals who want to buy cryptocurrencies since they too accept direct payments in Naira, one difference being they usually are integrated with more of the banking sphere than other P2P platforms. They usually have multiple methods of accepting the fiat currency of Naira, including bank transfers and debit card payments. One example of such a platform is Luno.

One option which exists is the use of Bitcoin ATMs. Although unpopular due to the low number of places it is available in, and due to the high transaction costs involved, it is still a good method to acquire Bitcoins in Nigeria.

Another method is via cryptocurrency trading platforms which allow users to trade Bitcoin and other cryptocurrencies. Users can easily deposit fiat currencies in their online wallets, the balance of which will be reflected on the online platform. They can then use that amount to buy cryptocurrencies and trade accordingly. However, it should be noted that it is such exchanges which come under the ban imposed by the Central Bank of Nigeria. Hence, many trading platforms and exchanges have withdrawn their services for Nigerian residents in light of the ban. The few that remain are accessed by Nigerians.

Finally, when any user has acquired his/her wallet, has decided where they are going to engage in cryptocurrency activities from, it is then the time to actually buy the cryptocurrency. It is to be noted here that many centralized platforms require you to abide by the KYC or ‘Know Your Customer’ protocols. Due to this, they will require you to register on their platform. Registration will also involve Nigerians verifying their identity via their identification card. Only after the identification process is completed on the company’s end, will any user be allowed to conduct transactions on their platform.

Benefits of Cryptocurrencies to Nigerians

Given the great lengths at which Nigerians go to in acquiring cryptocurrencies, surely there must be a reason behind them doing so. As stated earlier, Nigeria is responsible for around 50% of all peer-to-peer transactions taking place on the continent. This means that Nigeria has gone far and beyond at adopting cryptocurrencies. Why, though? That is what we look at in this section.

Given the severity of its impact, the coronavirus pandemic had a lot to do with Nigerians moving towards cryptocurrencies. Another factor was the crash in the prices of Oil. Nigeria is the largest oil producer and exporter of the African continent. Hence as the entire world braced for impact of the pandemic, oil demand fell and with it, the revenue for the country of Nigeria. These two factors, combined with a lot of other socio economic challenges, have given birth to an unemployment rate figure of 33%.

As a result, inflation rose to 17.33% as of February of 2021 leading the Naira to be devalued by 24%. All of this has led to Nigerians looking for an alternative to store the value of their earnings into, as the country’s fiat currency is experiencing high volatility.  Moreover, the future projections for the currency are also giving figures not in the favor of what a lot of Nigerians would like. Hence, they are looking into cryptocurrencies more so than ever.

Conclusion

The entire article dealt with the current state of cryptocurrency in Nigeria by addressing the level of its adoption, how people acquire it, and why they do so. By giving relevant statistics addressing the situation of Nigeria, this article gives a good overview of the topic and should serve as good food for thought in how African countries access cryptocurrencies.

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