With savings of just under $80 and a salary of $50 a month, Promise Nwabueze, a social media manager in south-east Nigeria, decided to invest all he had into cryptocurrency. The gamble paid off. Within months, his savings had increased fivefold. They have continued to rise ever since.
“Presently my total net worth is $2,500 — I’m sorry I’m being so excited, but it’s incredible,” he laughed, speaking by phone from Benin City, where he was teaching a class on crypto trading. “Now I am teaching so many people because the idea is to lift up [people] in Nigeria.”
Africa may have the world’s smallest crypto market, with just a 2 per cent share of global trade, according to a 2020 report by US blockchain research firm Chainalysis. But, with the value of bitcoin in circulation just under $1tn and each bitcoin selling for about $50,000, it has the largest proportion of retail users doing transactions under $10,000, according to Chainalysis.
Some observers, including the Central Bank of Nigeria, have expressed concerns that inexperienced investors could lose their meagre savings gambling on a highly speculative asset. “Small retail and unsophisticated investors also face high probability of loss due to the high volatility of the investments in recent times,” the bank said, as it sought to clamp down on the trade. Bitcoin experienced a similarly wild upswing in 2017, only to then plunge 80 per cent from its peak.
But Idayat Hassan, head of the Abuja-based Centre for Democracy and Development, said the crypto rally has been so strong that “citizens are not concerned about the potential losses but instead the immediate gains they make . . . because they are not losing”. There’s a sense of euphoria in part because it “gives the young people hope and represents opportunities” in a country where joblessness is rife, she said, noting that even her father was interested in trading cryptocurrencies.
“We are the poverty capital of the world,” Nwabueze said, explaining the popularity of cryptocurrencies. “The economic strength of our country is not really encouraging — our GDP, our inflation, unemployment is on the rise, and the jobs that are available do not really pay enough to put food on your table.”
Nigerians turned to bitcoin when the government froze the bank accounts of leaders of the EndSARS protests against police brutality that swept the country last autumn. Supporters began donating to the cause using bitcoin, a practice that was encouraged by the likes of Twitter chief executive Jack Dorsey.
The frenzy over digital currencies prompted the central bank to reiterate 2017 guidance prohibiting local banks from serving customers with crypto accounts. In a…