Nigerian Crypto Users and Enthusiasts Baffled by Claims of 100% BTC Premium

Nigerian Bitcoin users and enthusiasts have been left scratching their heads at claims of the world’s leading cryptocurrency trading at a 100% premium on the African continent.

It was reported that Bitcoin was priced at around $18,600 on exchanges within the country, far higher than the global average of $16,100 at the end of October 2020, sparking speculation that Nigerians’ interest in Bitcoin was creating a premium.

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However, the skeptics have emerged and crypto users and enthusiasts in Nigeria have moved to dispel the claims, and questioned the underlying evidence.

The truth behind the claims?

The country’s lack of access to traditional banking services, combined with the wild fluctuations in the price of the Nigerian Naira in the US dollar, has created an environment where financial activities are carried out mainly via mobile phone, a trend that is one of the main drivers of Bitcoin’s popularity in Nigeria.

However, the same localized demand may not be behind the surge in Bitcoin’s price that inflated the USD/Naira peg from $1 to $180.

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Are Nigerians buying Bitcoin at a premium?

Leader in the country’s financial technology industry, Tolu Kuti, said transactions and trades in Nigeria had to be carried out in Naira and there was no way to buy Bitcoin in US Dollars.

“All transactions to get bitcoin in Nigeria must be done in Naira.,” he said. “If you have USD and wants to buy, you must convert to local currency before you can make payment.”

In short, what we are seeing appears to be more of a discrepancy between the proposed exchange rates for Naira based on global markets and mobile money rates which reflect the desirability of USD payments for other services in Nigeria at this time.

Final thoughts?

At the end of the day, the reported 100% premium on Bitcoin in Nigeria is likely to be overblown and likely a misconception; rather than a singular burst of rocket-like Bitcoin enthusiasm from Nigerians.

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Nigerians’ interest in Bitcoin is not novel, but rather a reflection of a widespread need for financial freedom, economic security, and the option to transact in digital currencies with vastly less hassle than traditional banks.

In short, the crypto world can breathe a sigh of relief – the 100% claims are nothing to get too excited about.

Bottom Line:

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  • Nigerians’ interest in Bitcoin is driven by need for financial freedom and economic security
  • No way to buy Bitcoin in USD in Nigeria
  • Exchange rate discrepancy means 100% premium claim is likely overblown

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