Bitcoin appetite soars as Naira slumps.
The value of Bitcoin transactions in Nigeria and the value of the Naira currency are moving in opposite directions. Bitcoin trading is experiencing an unprecedented boom in Nigeria and Africa. Not only has Africa’s cryptocurrency market grown over 1200% by value received in the last year, but the region also has some of the highest grassroots adoption in the world, with Nigeria ranking in the top 20 of the Chainalysis Global Crypto Adoption Index.
In addition to being the third-fastest growing cryptocurrency economy, Africa also has a bigger share of its overall transaction volume made up of retail-sized transfers than any other region.
Nigeria’s Central Bank last year banned the banks from working with cryptocurrencies, warning of “severe regulatory sanctions” and freezing accounts of firms it says are using them.
But the public appetite for crypto has only increased. The clampdown has highlighted the benefits of using currencies outside the central bank’s control, and Nigeria remains one of the largest markets in the world for cryptocurrency trading platforms.
Nigerians are turning to crypto for business, to protect their savings as the naira loses value, and to send payments abroad because it is often hard to obtain U.S. dollars. Just after the central bank ban, the dollar volume of cryptocurrencies sent from Nigeria rose to $132 million in a single month.
With the Naira still sliding and youth unemployment at a record high, more Nigerians are likely to remain glued to their computer screens in the Bitcoin trading frenzy.
Cryptocurrency-based crime climbs to a record $14 Billion
Meanwhile, in the rest of the world, it is a different story of crime. The dollar amount collected through cryptocurrency-based crime hit a record high in 2021, as the volume of cryptocurrency transactions overall grew into tens of trillions of dollars, according to blockchain data platform Chainalysis’s 2022 Crypto Crime Report to be published in February.
The volume of cryptocurrency transactions grew to $15.8 trillion in 2021, up 567% from 2020, in a sign that the trading of digital assets is becoming increasingly mainstream. Illicit transactions totaled $14 billion in 2021, up 79% from $7.8 billion the previous year. But illicit transactions only made up 0.15% of cryptocurrency transaction volume in 2021.
While risks remain for potential cryptocurrency investors, the level of interest in crypto trading is not likely to slow down soon. And although cryptocurrency is usually associated with illicit transactions, more financial institutions have embraced crypto, and it is now fully entrenched in the global financial system.
In its report, Chainalysis warns that its tracked volume of illicit activity is likely to rise later as the company identifies more bad actors around the globe.
Chainalysis also warns that the rise of DeFi, or decentralized finance—an umbrella term for financial services offered on public blockchains—is a particularly menacing threat to the sector. Out of the total of about $3.2 billion in cryptocurrency stolen in 2021, 72% was stolen from DeFi protocols. The use of DeFi to launder money also increased 1,964% between 2020 and 2021.