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A former Microsoft software engineer and Buycoins Africa co-founder Tomiwa Lasebikan says some Nigerian expats are now using bitcoin to bypass the country’s overvalued exchange rate when sending remittances.
According to Lasebikan, the Central Bank of Nigeria’s (CBN) fixed $ 1: 380 exchange rate takes recipients away 20-30% of the value of their remittances every time they fetch funds. At the time of writing, the parallel exchange rate of one dollar against the Naira is 1: 480, according to Abokifx.
Likewise, importers who are hampered by the country’s strict foreign exchange regulations are now turning to bitcoin when making payments online or across borders. In an interview, Lasebikan says bitcoin has also given Nigerian residents the opportunity to pay for services or utilities that CBN usually deems unnecessary. He says:
Another thing would be for people who want to have access to resources outside the country … You want to pay for Nexflix, Apple Music. All the things the government is aggressively holding back on.
The software engineer explains that the Nigerian authorities, prior to this year’s events such as the Endsars protests, “were unaware of the immense potential of bitcoin.” During the lockout period, cryptocurrency usage in Nigeria has grown and the country is now ranked as one of the top cryptocurrency markets. It is the events in the world of cryptocurrencies over the past twelve months that may have contributed to changing the perception of cryptocurrencies by the Nigerian government.
As a result, as Lasebikan acknowledges, officials may now want to take action to slow the adoption of digital currencies by Nigerians. According to Lasebikan, a simple way for authorities to accomplish this is to crack down on centralized crypto exchanges, enforce stricter KYCs, or move crypto companies away from traditional banking infrastructure.
However, as Lasebikan explains, this “will not kill bitcoin or the value of bitcoin” because “most crypto activity takes place in informal channels”. He says any crackdown will not result in the downfall of peer to peer trading which is initiated via Whatsapp or Telegram’s social media chat groups.
Bitcoin trading is resistant to censorship and there is no way for the Nigerian authorities to stop or reverse transactions. Awareness of this and other attributes of bitcoin means that the CBN and others will fail in any effort to control the digital currency. For crypto users, knowing about this is reassuring and helps maintain or accelerate the momentum of adoption.
Do you agree with Lasebikan on the immense power of bitcoin in Nigeria? Share your thoughts in the comments section below.
Image credits: Shutterstock, Pixabay, Wiki Commons
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