Naira Creates “Crypto Exchange Rate” As Nigerians Opt For Digital Tokens
Nigeria has one of the world’s most chaotic exchange rates, as seen by the official and black market rates. Now, throw in the “crypto exchange rate,” and Nigeria has a third competitor in currency exchange.
According to Bloomberg, since 2020, Nigerians have been accumulating crypto coins due to the reduced confidence in the country’s fiat currency, the Naira.
The Emergence of a New Rate
Speaking to Bloomberg, the president of the Association of Bureau de Change Operators of Nigeria, Aminu Gwadabe, talked about Nigerians’ preference for cryptocurrency.
Most people purchase crypto tokens due to their loss of confidence in the Naira. He also added that Nigerians adopt the USD exchange rate on the crypto floor to determine the value of the Naira.
However, the Central Bank of Nigeria has the sole authority to control the official rate of the Naira. On the other hand, the black currency market operates on the principle of demand and supply. Meanwhile, the black market rate is often cited in many transactions as the real value of the country’s currency.
Furthermore, as Nigerians use U.S. dollars to purchase digit currency, experts believe that the crypto exchange rate represents the most likely value of the Naira.
As of July 27, the official rate of the Naira against the USD slumped to 424.34 per dollar. However, the black market rate is 670 per USD, which is 58% more costly than the official rate.
During the same period, the transactions coming from Nigerian wallets on Binance were $103,691 in 24 hours. Furthermore, records show that Nigerians transacted $185 million in BTC on Binance in the year’s first quarter.
Crypto Adoption Among Nigerians
In Africa, Nigeria is leading in crypto adoption and has one of the highest figures in the world. In 2020, the interest in digital assets spiked among Nigerians. The surge is such that the country became one of the leading nations, contributing to the 880% crypto adoption increase rate the same year.
Last year, about 24.2% of Nigerians revealed that they held at least one digital token.
Furthermore, Gemini’s 2022 Global State of Crypto Report revealed that 26% of Nigerians own at least one form of digital token. The majority of Nigerians who see cryptocurrency as the future of money is 63%. 44% of non-crypto users disclosed that they are interested in buying cryptocurrency.
Meanwhile, when it comes to crypto regulations, the Nigerian government appears to be for or against legalizing the use of virtual currency.
At the peak of the adoption surge, the government revealed plans to launch the digital version of the Naira, the e-Naira. The new e-Naira is set to become the country’s digital token for transactions.
After unveiling the e-Naira, the country’s central bank prohibited commercial banks from processing payments made into crypto accounts.
However, the e-Naira has failed to perform as the regulators intended it to because Nigerians are yet to get over the decision of the central bank to ban crypto accounts and transactions.
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