On the back of the recent CBN order banning banks from all crypto-related dealings, Nigeria’s bitcoin P2P trading has seen a spike in transaction volume.
According to data from Usefultulips, bitcoin’s P2P trading volume in the country has increased by about 16% barely a week after the CBN order. Nigeria posted $7.35 million in P2P trading volume, representing a $1 million increase from the $6.35 million processed prior to the ban.
Recall that the CBN had instructed banks to shut down accounts of individuals or businesses linked to crypto transactions. This meant that traders could no longer buy or sell crypto offerings using their Nigerian bank accounts.
In the wake of the ban, crypto exchanges including Bundle, Binance and Luno moved to disable Naira deposits on their platforms.
However, this has steered a surge in P2P trading among Nigerians as they find ways to bypass the CBN restrictions and continue leveraging the booming crypto market.
P2P Trading via Vendors On the Rise
Following the CBN crypto order, more Nigerians are trading through crypto vendors. While speaking to Technext, a crypto P2P Vendor, Victor says that early inertia from investors after the CBN directive later gave way to increased trading activity.
Around the time the CBN directive was given, the panic and uproar slowed trading by a day or two. But transactions quickly gained momentum afterwards.Victor
“I would say that P2P trading volume conducted on our end has increased drastically, by almost 1000%. Most investors who traded directly on exchange platforms could no longer conduct those transactions using Naira. Now they are more or less forced to use P2P,” he added.
Victor terms the CBN order a “blessing in disguise”, proof of how his P2P crypto service has been enjoying increased patronage since the order.
“Right now, we are getting a lot of customers. People are really embracing our services,” he said rather excitedly.
Victor goes on to explain how he processes P2P transactions for customers.
I run the P2P service together with a few partners. We have an Instagram page where we engage our clients and are still building our online presence. Let’s say you want to buy a certain amount of bitcoin, you just contact me then I give you the price in Naira. Once you transfer the money to my account, I send the crypto to your bitcoin wallet.Victor
Recall that in a follow-up statement to explain its crypto restrictions, the CBN associated crypto dealings with criminal activities and made reference to a warning by the United States’ Federal Bureau of Investigation (FBI) citing alleged multimillion-dollar crypto-related fraud.
Victor says that the CBN directive only presents crypto vendors as being involved in illegal and fraudulent activities, which dissuades some potential customers from dealing with them. He opines that all financial services are susceptible to fraud and cryptos should not be made the scapegoat.
But for him, gaining the customer’s trust is key to quelling any fears they might have of being scammed.
“It’s easy especially when one has earned the trust of clients. You know there are still scammers out there.”
How P2P Trading Works
Peer-to-peer (P2P) trading involves the buying or selling of cryptos between two traders via an exchange or vendor. Crypto exchanges usually operate an escrow-based P2P service.
The exchange acts as a third party that facilitates trading between the two transacting parties. For instance, if a trader places a sell order for 20 BTC (at $1 to N381), the crypto exchange holds the funds in escrow until the interested buyer has transferred the money to the seller.
If the transfer is not completed, the transaction is cancelled. This guards against investors being scammed.
Nigerian crypto exchanges such as Bundle and Busha as well as global players, Binance and Paxful provide P2P escrow trading services. But there still lies the constraint of traders not being able to directly buy/sell cryptos via Naira deposits and withdrawals.
Before the CBN clampdown, exchanges could credit a trader’s crypto wallet or bank account on receipt of payment or withdrawal request respectively. The transaction was executed without traders having to interact with each other.
Hence, traders may prefer transacting with crypto vendors. A buyer can contact a vendor directly and purchase bitcoin without any intermediary. For instance, if a trader wants to purchase 20 BTC from a vendor, all the buyer has to do is transfer the Naira equivalent to the vendor’s bank account. The Vendor then sends the 20 BTC directly to the buyer’s bitcoin wallet.
In summary, investors are now switching to P2P trading, and crypto vendors are the big winners. Despite the CBN order, Nigeria’s crypto boom goes on.