
Nigeria has established itself as an undisputed leader in global cryptocurrency adoption, ranking second in the global adoption index, according to the latest Chainalysis report.
The blockchain analytics firm highlighted that cryptocurrencies are transforming the financial landscape in the country, which has seen strong growth in the use of digital assets in recent months.
According to the report “Sub-Saharan Africa: Nigeria Takes #2 Spot in Global Adoption, South Africa Grows Crypto-TradFi Nexus”, Nigerians are increasingly using cryptocurrencies to Address economic challenges and manage your finances more efficiently, highlighting the growing importance of these digital assets in the financial context of the African continent.
Nigeria: Ground Zero for Cryptocurrency Activity
According to Chainalysis, between July 2023 and June 2024, Nigeria received approximately $59.000 billion worth of cryptocurrency transactions. This trading volume, according to the report, was primarily driven by the innovation that cryptoassets offer in helping people address economic challenges.
Chainalysis highlighted that cryptocurrency activity in Nigeria is driven by smaller denomination transactions, which account for 85% of the value recorded in cryptocurrencies in the past year. The ability of cryptocurrencies to facilitate everyday payments, such as paying bills and recharging mobile phones, has led many Nigerians to recognize their utility in daily life.
Moyo Sodipo, COO and co-founder of Busha, a local cryptocurrency platform, told Chainalysis that The perception of cryptocurrencies in Nigeria has evolved significantly, moving from being seen as speculative assets to being a practical financial solution for everyday transactions.
The shift in mindset that Sodipo highlighted is due, in part, to the need for Nigerians to find alternatives to a traditional financial system that has shown enormous limitations, especially due to high inflation and devaluation of the local currency, the naira. The loss of value of the naira has led to a surge in the adoption of stablecoins, which account for approximately 40% of all stablecoin flows in the region, with Nigeria being the country with the highest share in Sub-Saharan Africa.
Stablecoins have become a solution to economic instability
According to report According to Chainalysis, stablecoins have emerged as a key pillar in Nigeria’s crypto economy, providing users with a tool to mitigate the impact of local currency volatility. These digital currencies, which are pegged to more stable assets like the U.S. dollar, offer Nigerians a reliable way to store value and conduct international transactions. According to Sodipo, using stablecoins for cross-border remittances has become increasingly popular as they are significantly faster and cheaper compared to traditional methods of sending money.
The average cost of sending a $200 remittance from Sub-Saharan Africa is approximately 60% lower when using stablecoins instead of conventional remittance services. This saving is crucial for many Nigerians, who face high living costs and are looking for ways to optimize their resources. Furthermore, the growing acceptance of stablecoins is revolutionizing the way Nigerian businesses transact, allowing them to operate more efficiently in the economic arena.
DeFi: The New Financial Frontier in Nigeria
On the other hand, Chainalysis highlighted that Nigeria has not only excelled in cryptocurrency adoption, but also in the growth of the decentralized finance (DeFi) ecosystem. With over $30.000 billion in value received by DeFi services last year, the country is positioned as a leader in this new wave of financial innovation.
DeFi platforms are providing Nigerians with opportunities to earn interest, borrow, and engage in decentralized trading, all without the need for traditional intermediaries.
The recent removal of a ban by the country’s Central Bank, which prevented banking institutions from serving cryptocurrency businesses, has been a key factor in the current growth that the DeFi sector is experiencing. According to the report, this move has facilitated the creation of partnerships and enabled smoother transactions, which has further boosted the adoption of decentralized protocols and applications in the country. Likewise, the introduction of the Accelerated Regulatory Incubation Program (ARIP) by the Nigerian Securities Commission has also been welcomed as it seeks to provide a clear regulatory framework for virtual asset service providers.
The firm highlighted that dialogue with regulators is increasingly crucial as Nigeria continues to move forward in the adoption of cryptocurrencies and related technologies. Traditional financial institutions are beginning to show interest in the crypto space, although many are still cautious due to regulatory uncertainty. However, growing consumer demand for crypto-related services is putting pressure on these institutions to adapt and evolve.
Chainalysis concluded that Nigeria is uniquely positioned to lead the way in the adoption of cryptocurrencies and blockchain technologies in Africa and that the country can become a role model for cryptocurrency use on the continent.
The combination of an evolving regulatory framework, growing acceptance of stablecoins and the rise of decentralized finance suggests that Nigeria is not only transforming its own financial landscape but could also have a significant impact on the global cryptocurrency economy, the cryptocurrency and blockchain analytics firm underlined.