Nigeria Protests Show Bitcoin Adoption Is Not Coming: It’s Here
Nigerians called for the disbandment of the special anti-robbery squad (SARS) in 2017, and the government supposedly complied. But after reports of SARS officers allegedly killing a young boy in southern Nigeria surfaced on Oct. 3 of this year, protests erupted again. The police unit stands accused of illegal killings, extortion and torture of innocent civilians: many of its victims over the years were young men between the ages of 18 and 35.
On Oct. 9, Yele Bademosi, CEO of Binance-backed payments app Bundle, took to Twitter to share his own brutal encounter with SARS. Youths marched through the streets of Lagos while the hashtag #EndSARS went viral on social media, leading to protests in countries with large Nigerian diaspora populations including the U.K., U.S., Canada and Germany.
The next day, Bademosi’s firm set up crypto wallets to help raise funds for the protests, highlighting projects already underway. Local activist groups such as the Feminist Coalition had already started raising funds in multiple fiat currencies to help sustain the protests.
Within days the coalition’s bank accounts were frozen and the coalition asked donors to divert their funds to bitcoin wallets. As of Oct. 18, the group had raised more than 7.2 bitcoin (or $82,000) accounting for 44% of the total funds raised for the movement. The message spread far and wide: Even Twitter founder Jack Dorsey used his platform to promote bitcoin donations. On Oct. 20, reports surfaced that Nigerian security forces had opened fire on protesters. The coalition announced it was continuing its efforts to support the injured.
“I knew that it was going to kind of snowball into what it has become and it’s kind of crazy that all of this has happened in just, like, six or seven days,” Bademosi told CoinDesk.
This is all part of a larger story. Nigeria’s predominantly young population, its status as a regional tech hub, an inflationary local currency, along with a large diaspora looking to send remittances home have been driving crypto adoption and innovation in Africa’s most populated country. Now, Nigeria’s federal government is making plans to facilitate national blockchain adoption.
A Chainalysis report on the geography of crypto revealed Nigeria ranked eighth (out of 154 countries) in its 2019-2020 global adoption index. The country ranked first among African countries in peer-to-peer (P2P) payments moving $139 million in the past year, the report said.
Scale of Adoption
In late 2018, Ahmed Rasheed, 29, opened a bitcoin wallet for his unborn daughter in Nigeria’s southwestern state of Oyo.
The previous year, after a friend had introduced him to crypto, he quickly amassed $720, the equivalent of his six months of his then-salary as a physics and mathematics teacher. He received the crypto through airdrops, where projects deliver small amounts to wallets for free, usually as a marketing strategy.
With the money, Rasheed bought a laptop, quit his job and immediately opened bitcoin wallets for his wife and elder daughter. He eventually found work in marketing at a blockchain firm and his wife also found work with a blockchain project. Now, when he has to pay his daughter’s school fees, he converts savings from her designated wallet into naira.
“We’re definitely a blockchain family,” Rasheed told CoinDesk.
Rasheed’s enthusiasm for investing in crypto is happening at a national scale. According to Nena Nwachukwu, Nigeria regional manager at peer-to-peer (P2P) bitcoin exchange Paxful, in the period between January and September 2020, new registrations at the exchange rose 137% compared to the same period last year. Now, the exchange has over 600,000 Nigerian users, Nwachukwu told CoinDesk.
“This year cryptocurrency popularity and usage by Nigerians has grown by leaps and bounds,” Nwachukwu said, adding the COVID-19 pandemic and the Central Bank of Nigeria’s (CBN) recent devaluation of the naira, are compelling more people to actively search for other means to secure their wealth.
According to Senator Ihenyen, fintech lawyer and general secretary of Nigeria’s blockchain association SiBAN, a self-regulatory body in the industry, adoption trends show that the largest use cases for crypto are in remittances and P2P trading.
Nwachukwu confirmed this, adding that Paxful’s Nigerian customers are very knowledgeable and have evolved from using bitcoin only as a form of speculative investment to making online payments, cross-border remittances, freelancer payments and e-commerce.
According to Ihenyen, there are about 10 international and local exchanges in Nigeria, some of which are currently registered with SiBAN, but he suspects there might be more operating in the country.
Mayowa Tudonu, a software engineer who is building crypto exchange products on the Ethereum blockchain, helped Africa-based digital payments platform InterSwitch to develop a cross-border payments system. Tudonu calls remittances a “core application” of blockchain that can severely disrupt international payments.
“People who have to pay their kids’ school fees, to send money to families, are beginning to adopt bitcoin as a form of remittance. I mean, we are looking at transaction volumes in terms of billions of naira,” Tudonu said.
According to a report from consulting company PricewaterhouseCoopers (PwC) Nigerian migrants sent home a whopping $23.63 billion in remittances in 2018.
Additionally, since bitcoin allows for the quick transfer of large volumes, particularly for international trade deals, intermediaries would facilitate fiat-to-crypto transfers between Nigeria and other countries like China. Bernard Parah, 28, got started in the crypto space by personally handling large over-the-counter (OTC) transfers on behalf of businessmen.
P2P lending platforms Paxful and LocalBitcoins saw dramatic surges in trading volumes in the first seven months of 2020, which began to decline in the following months. Although Nigerians are looking for a hedge against the continued pressure on the naira, Nwachukwu said the devaluation of the currency meant people had less money to spend.
“We have seen cases of active customers, very much interested in trading but cannot continue due to a lack of sufficient funds or job loss,” Nwachukwu said.
Software developer Tudonu began building Ethereum-based digital payments infrastructure after completing a course on Ethereum development with ConsenSys in 2018. He told CoinDesk he was one of the high scorers, and has since gone on to build a successful career in the industry. Tudonu often mentors Nigerian developers interested in breaking into blockchain.
An underlying reason why blockchain is gaining traction fast in Nigeria is because its young and tech-savvy population is showing an eagerness to learn more about Web3.0, a decentralized internet powered by blockchain technology.
Awosika Israel Ayodeji is a project designer at Web3Bridge, a blockchain education platform created to onboard developers in Africa.
“Blockchain has a lot of potential for us in terms of building system infrastructure, government infrastructure … also, I personally saw how if you are heading into the blockchain space, it’s easier to create a name, brand and niche for yourself,” Ayojedi told CoinDesk.
He acknowledged that airdrops are not necessarily enough. His efforts to teach the “tech behind the airdrops” so far introduced 40 developers to the space in the last year.
SiBAN’s Ihenyen said educators have done great work so far. “Some of them work online. Some of them also go to cities across Nigeria, trying to educate people, especially young people about cryptocurrency and blockchain,” Ihenyen said, adding that some used WhatsApp groups to organize classes and communicate.
In Nigeria’s northwestern state of Kano, 29-year-old Sani Musa Sharu, who is managing his family’s savings in crypto, was excited to find that his government was officially supporting blockchain adoption in the country.
Sharu saw a draft framework that was obtained by a local news outlet last week that revealed key government ministries were involved in developing strategies for nationwide blockchain adoption, which included the creation of comprehensive regulatory oversight.
Before this, the government had left the crypto industry largely alone. Apart from the CBN in 2017 declaring digital currencies are not legal tender in Nigeria, the country’s Securities and Exchange Commission issuing a warning about investing in crypto and later classifying all crypto assets as securities, there had been no major efforts by the government to regulate crypto.
Earlier this year, when Parah decided to launch his crypto payments app Bitnob; he said did not have to obtain a license to launch the app and exchange. He only needed to register his business with the Corporate Affairs Commission (CAC).
Earlier this month, while protesting in Lagos, Parah was multitasking by pushing updates for his app, which he says has been gaining traction since May.
“We have to keep things moving as well,” he said.