According to a crypto report released April 12, by KuCoin, titled, “Into the Cryptoverse Report: Nigeria Edition 2022, Nigeria stands head high in crypto adoption. Increasingly, more people are jumping on the bandwagon, becoming crypto investors themselves.
- Crypto investors account for 35% of the Nigerian population aged 18-60. “According to our survey conducted in early 2022, 33.4 million Nigerians, which accounts for 35% of the population aged 18 to 60, currently own or have traded cryptocurrencies over the past six months. 70% of these crypto investors claim that they will likely increase their cryptocurrency assets soon. Another 6% of the country’s population are interested in investing in cryptocurrency in the coming six months, suggesting that the cryptocurrency adoption rate might continue to increase.”
- 37% of crypto investors have been trading cryptocurrencies for more than 3 years. “According to our survey, 37% of crypto investors in the country began trading cryptocurrencies more than three years ago. At the same time, 6% started trading cryptocurrencies more than six years ago. 26% of crypto investors have begun trading cryptocurrencies in the last 6 months.”
- 52% of crypto investors are under the age of 30, embracing financial inclusion. “The youth unemployment rate in Nigeria increased to 53.4% in late 2020, driving youth to cryptocurrencies as their alternative financial solutions. Youth aged 18 to 30 accounts for 52% of crypto investors in the country. Technology and sports are the top hobbies of these crypto investors. YouTube, Telegram, and Facebook are the top social media used for cryptocurrency-related information. The high adoption rate of cryptocurrency also brings about gender parity in crypto investment; as our survey reveals, women account for 50% of crypto investors, on par with men.”
- The majority invest in crypto for the long run, 40% with an entrepreneurial goal. “Nigerian investors generally hold a long-term, practical mindset when it comes to cryptocurrency adoption. 62% of crypto investors perceive cryptocurrencies as the future of finance. 53% consider cryptocurrency to be a reliable, decentralised solution to store the value of their assets and mainly to use it for payments and transactions. 50% invest in cryptocurrency to gain higher returns in the long run. When asked about how they plan to use the profits from trading cryptocurrencies, 40% of crypto investors mentioned the attempt to start their businesses and improve the living conditions of their families. 36% invest in cryptocurrencies to add a source of income to their salaries. 34% strive to achieve financial independence, and 26% hope to rely on cryptocurrency as their main source of income without working additionally.”
- Nigerian crypto investors allocate the majority of their assets to cryptocurrency. “Our survey suggests that Nigerian crypto investors allocate an average of 60% of their assets to cryptocurrency, followed by cash/bank deposits (20%), foreign currency (7%), and other instruments. 52% of Nigerian crypto investors allocate over half of their assets to cryptocurrencies”
- 65% of crypto investors deposit fiat money into cryptocurrencies through peer-to-peer trading. “73% of crypto investors have bought cryptocurrencies with fiat over the past month. After the Central Bank of Nigeria issued an order barring banks from enabling crypto transactions in February 2021, the number of Nigerian investors buying cryptocurrencies with naira via peer-to-peer trading has been increasing. As of February 2022, 65% of Nigeria’s crypto investors exchange fiat for cryptocurrencies via peer-to-peer transactions.”
- Finally, users look for ease of use, low fee and credibility in crypto exchanges. “When choosing which crypto exchanges to use, 45% of Nigerian crypto investors mention the ease of exchanging fiat for cryptocurrencies and the lower transaction fees to be their top considerations. A friendly user interface enabling investors to complete transactions quickly without effort is another appealing factor mentioned by 39% of crypto investors. The credibility of the crypto exchange endorsed by third parties and the perception of security is critical hygiene factors to facilitate user trust with the platforms, as mentioned by 37% of Nigerian crypto investors.”
Correlation with the IMF report?
According to a research published by the International Monetary Fund (IMF) on March 25 titled, “Crypto, Corruption, and Capital Controls: Cross-Country Correlations”, people in nations with greater levels of corruption are more likely to use cryptocurrencies than in other countries.
“We find that crypto-asset usage is significantly and positively associated with higher perception of corruption and more intensive capital controls,” The IMF report said.
Notably, in 2021 Nigeria ranked 154th among the 180 countries listed in Transparency International Corruption Index. Making Nigeria the second most corrupt country in West Africa after Guinea.
Also, according to the IMF report, nations that have severe capital restrictions, making it difficult to move money outside the country usually have an increased number of crypto users.
In an attempt to connect the dots, the Central Bank of Nigeria last week fined six banks ₦1.3 billion for engaging in crypto transactions. The CBN considers digital assets harmful to the country’s financial system.
Apart from Nigeria being a corrupt nation and having severe restrictions on cryptocurrencies, there are other reasons to explain the high rates of crypto adoption.
A pointer is the limited access to affordable financial services in the country. According to the Kucoin report:
“While its economy relies heavily on remittances, a large proportion of its population does not have access to bank accounts, and money transfer is slow and costly.”
The standard of living in Nigeria has also been in a decline, with the rates of unemployment rising, caused by a combination of naira depreciation and the inflation of goods and services. Cryptocurrencies have become alternative solutions for the storage and transfer of assets.
Nigeria’s relatively young innovative population also plays a big part in crypto adoption.
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