The Nigerian cryptocurrency market may be on the verge of a local bull run, thanks to newly popularized avenues to the global market.
Emmanuel Babalola, Binance’s business manager in Nigeria, said he’s seen a 50 percent increase in signups so far in 2020, leading to “thousands” of new Binance users in Nigeria. Roughly 300 people signed up for a corresponding “masterclass” in Benin in January, teaching users how to set up their own personal wallets and experiment with margin-trading strategies. There was so much demand for the six-hour class that Babalola will run three more classes over the next four weeks and offer two a month going forward.
If various big-name crypto projects vying to serve the developing world are looking for inspiration, look no further than this West African nation of 190 million. There’s rampant demand in Nigeria, where the World Bank estimates 35 million unbanked adults have a mobile phone. The vast majority of these unbanked users are women.
“The majority of users in Nigeria use Binance mobile on their phones,” he said, adding there are roughly 4,000 traders in Binance’s Nigerian Telegram group. “By the end of this month, we’ll have a fiat on-ramp on the mobile app as well.”
Although Binance was one of the first global exchanges to launch a fiat-on-ramp in Nigeria, a market largely dominated by peer-to-peer exchanges like LocalBitcoins and Paxful, Binance isn’t the only game in town. The local exchange BuyCoins, launched in the aftermath of 2017’s bull run also has a comparable fiat-on-ramp. On BuyCoins, Nigerians can buy cryprocurrency using their Naira-denominated debit cards or bank transfers. Lasebikan’s team created $50,000 worth of the ethereum-based stablecoin Naira, backed one-to-one in the bank, and distributed it through the local over-the-counter (OTC) traders’ association, Alpha Training Lab.
“In our country, there’s a lot of bitcoin trading that happens offline,” said BuyCoins co-founder Tomiwa Lasebikan. “People who trade a lot on WhatsApp groups. … No one in the country can accurately estimate how much [trading] activity there is.”
Lasebikan said the exchange now handles roughly $5 million in monthly volume, predominantly in bitcoin trading. The modest infusion of stablecoins into the market served as an indirect on-ramp to the platform.
The modest Naira effort garnered such clear results that now DeFi leader MakerDAO is trying a similar approach to encourage local adoption.
The ethereum-centric stablecoin project gave a $15,000 grant to the internet service provider Althea to offer connectivity in exchange for DAI stablecoins in Abuja, Nigeria’s capital city. So far there are 16 households participating and operating nodes, according to Althea co-founder Deborah Simpier, paying the startup around $15 worth of crypto a month for WiFi. She said they’ll be expanding to Lagos, Nigeria’s largest city, next month and encouraging initial node operators to provide WiFi to local mobile subscribers, generating their own crypto income.
Binance’s Babalola said he’s heard of, and is optimistic about, such stablecoins, although his own team is focused on the exchange’s native stablecoin, BUSD. Stablecoins can be particularly attractive for traders who want to transact, for example, with undocumented youth who can’t get a formal exchange account.
“Less than half of Nigerians have government-issued ID cards,” Babalola said. “Most crypto users in Nigeria are young people in schools.”
All things considered, 2020 will see a wider variety of onboarding options than ever before. In addition to a few incumbent African exchanges from pre-2017, like Luno, there are now several exchanges focused on connecting Nigerians to the global cryptocurrency market.
“We have agents on the ground going door to door, talking about crypto and the potential it holds,” Babalola said.
Correction (Feb. 21, 19:30 UTC): This article has been updated to clarify that BuyCoins doesn’t directly distribute cryptocurrency to unbanked users and most customers with exchange accounts use banks.