There are more Bitcoin trading activities going on in Nigeria than exchanges record. This is because passionate users of cryptocurrencies are moving towards simpler channels that filter the technical processes that derive from trading Bitcoin on exchanges. Bitcoins worth over $ 100 million are traded on chat apps like WeChat and Telegram on a monthly basis, according to a local media outlet.
All trading methods used
Apparently, there are three denominations for cryptocurrency trading platforms in the country. Formal ones like Luno record around $ 6 million in daily transactions. While semi-formal peer-to-peer trading platforms like Paxful, Bitcoin Pro, LocalBitcoins and Remitano record up to $ 18 million on a weekly basis. The underdogs, which appear to be the most informal, are the aforementioned chat applications in which thousands of users actively trade in groups or through individual conversations. In fact, some exchanges take place on Instagram and on WhatsApp stores where transactions are initiated and finalized.
Interestingly, the latter makes up most of the ongoing trade in the country and as Nigeria accounts for 50% of the weekly trade volume recorded in West Africa. These activities suggest that there is still room to broaden their reach for exchanges.
Simplifying the registration process and securing funds, as well as creating easily understandable trading features, could help exchanges reach and satisfy the large number of people who prefer trading outside of these platforms.
Prohibitions are useless
For smaller entities, these informal channels are very useful. For larger companies, conducting transactions through these platforms doesn't seem to be very efficient.
This is because larger companies would require contact with multiple suppliers. In addition to accurate transaction documentation and the search for companies with the required Bitcoin supply to successfully execute the transaction.
The integration of liquidity pools and other favorable aggregation options could help exchanges attract customers from this large market that had been ignored by many.
Meanwhile, events in Nigeria show that an anti-crypto ban in the country may not be as effective as the government hopes. Clearly, Nigerians are increasingly using decentralized and simplified platforms to carry on their trades.
The activities related to cryptocurrencies in Nigeria mirror the views of the Indian crypto community. There a number of advocates there believe that banning cryptocurrency trading will generate an opening for cryptocurrency users to introduce creative alternatives through which they can continue to take part in the space.
We are sure that bans are useless, but only good regulation can be useful to states. Banning cryptocurrencies altogether would only give rise to a new black market.