Cryptocurrency adoption is on the rise in Nigeria, the largest economy in Africa, as it grapples with a depreciating currency and surging inflation, according to a report from New York-based blockchain research firm Chainalysis released on Tuesday.
Between July 2022 and June 2023, Nigeria witnessed a 9% year-over-year increase in cryptocurrency transactions, totaling $56.7 billion. Meanwhile, in Uganda, although cryptocurrency usage is smaller, it experienced rapid growth, surging by 245% to reach $1.6 billion in the same period. In contrast, Kenya saw a decline in crypto usage, with a drop of over 50% to $8.4 billion, as indicated in the report.
In Nigeria, the interest in bitcoin and stablecoins, which are digital tokens tied to stable assets to mitigate price volatility, surged notably during severe drops in the value of the naira, particularly in June and July of 2023, as highlighted by Chainalysis.
The naira’s depreciation reached historic lows following a series of bold reforms implemented by President Bola Tinubu, which included abolishing a popular yet expensive petrol subsidy and removing certain exchange rate restrictions.
Furthermore, in the previous year, Nigeria’s financial regulatory body introduced a set of guidelines for digital assets, signaling the country’s effort to strike a balance between a complete ban on cryptocurrencies and their unregulated use, underscoring it’s evolving stance on the matter.