Unarguably the most populous black nation on earth and the largest economy in Africa, Nigeria certainly cannot be relegated in the affairs of the African continent. She recently ranked, according to data gathered from the renowned peer-to-peer Bitcoin exchange Paxful, as the second largest Bitcoin market in the world, surprisingly ranking above China and just below the United States.
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Some observers have rightly attributed the popularity of Bitcoin in Nigeria to the now moribund Ponzi scheme known as MMM. Until it crashed in the early months of 2017, the scheme, which had the option of donating Bitcoin on the promise of a monthly return of 30% to investors, was quite popular in Nigeria. Over 2.5 million Nigerians, consisting mostly of youths, were reportedly involved in the scheme.
After the infamous crash of MMM, many young Nigerians were able to learn about Bitcoin. That will set the stage for a Bitcoin revolution in Nigeria. In the past few years, Bitcoin has been used to send and receive money by Nigerians in the Diaspora as well as those at home. Nigerian businessmen too are not left behind, as many importers prefer sending money to China using Bitcoin. It is not only cheaper but faster and more efficient. Therefore, we find Bitcoin organically thriving in Nigeria.
Another evidence to show that Bitcoin is gaining traction in Nigeria lies in the Google trend, a metric which captures the search for Bitcoin on the internet around the world. Stunningly, Nigeria topped the Google trend for Bitcoin in November 2020. This clearly means that, perhaps more than anywhere else in the world, the interest in Bitcoin is highest in Nigeria.
But it seems to this writer that although the awareness about Bitcoin is relatively high in Nigeria, there are on still very few Nigerians holding Bitcoin. This is because the vast majority of those who have the knowledge of Bitcoin in Nigeria are youths, most of which are handicapped financially.
We therefore have youths who either own only very tiny fraction of Bitcoin or has zero Bitcoin holdings. The paradox of Bitcoin in Nigeria, therefore, lies in the fact that those who have the knowledge do not have considerable amount of money to invest. Whereas, those who can afford to invest into Bitcoin do not have the needed knowledge to do so.
In some instances, there are even those who have the knowledge but have a very low risk appetite. We find this category of people only willing to invest meager amount of money into Bitcoin while thousands of dollars regrettably sit idly in their bank accounts.
Some months ago, I did a little survey about Bitcoin in my office, a leading finance house in Nigeria. In turned out, quite sadly, that I was the only person holding Bitcoin of the about 50 staff I interviewed. While there were a few persons who knew what Bitcoin was and had even used it in the past, none had the confidence to hold Bitcoin as a store of value.
Consequently, we tend to have more Nigerians using Bitcoin for transactions than we do as a store of value. The implication is that the country will continue to rank quite high in terms of Bitcoin volume but very low in the wealth of Bitcoin. Given that a Bitcoin reserve might become almost as important as a gold reserve in the future, Nigeria cannot afford to keep up with the present trend.
To get out of this dilemma, there will be need for the older generations of Nigerians to get involved in Bitcoin. Since the older generation in any given country usually controls the larger share of the wealth, we need to see older people get involved with Bitcoin in Nigeria as the case already is in Europe, America, and Asia.
Africans were largely spectators in the industrial revolution, and even the ineternet age, we cannot afford to have a repeat of history. Bitcoin is a financial revolution and we must position ourselves this time around.