Understanding Crypto Adoption in Nigeria to Unleash a Future for Crypto Utility
How the crypto industry can solve its cyclical crash syndrome
If you have been around the crypto space for a minute, it would seem that the only constant thing about crypto is that it crashes. Since the inception of Bitcoin in the 2010s, the crypto industry has witnessed seven major market crashes where the overall market cap of the entire industry nosedives to a fraction of its all-time-high value within a short period. Bitcoin, which still accounts for the lion’s share of the crypto market cap always seems to be the main trigger for these crashes. When Bitcoin sneezes, the rest of the crypto economy catches a cold.
But is it that straightforward? Is the life and death of the crypto industry dependent on Bitcoin and the whims of its whale holders? Or is the cyclical crypto crash that like clockwork happens after every bull run a symptom of more complex problems? In this article, I submit that the constant loss of confidence in the intrinsic market value of the crypto space is a direct result of the lack of real-world utility hardwired at an intimate level into the industry. Also, to solve this problem we need to begin to understand the nature of crypto adoption, especially in emerging markets like Nigeria.
An Industry Diverging from Its Core Mission
Satoshi Nakamoto created Bitcoin with the hope that it will become the digital equivalent of cash. An alternative monetary system that does not rely on governments for its legitimacy and existence. In 2022, Bitcoin has largely been relegated to the position of a glorified “digital gold”, an asset that you hoard for the longest period, never to be used for your day-to-day needs until a rainy day comes. However, the funny thing has been that time over time, whether its the crash of 2017 (from $20000 to $3200), 2021 (from $63,000 to $29,000), or the most recent one this year 2022 ($68,000 to $20,000), Bitcoin has never behaved the way gold has done for centuries, i.e. maintain its overall worth when economies tumble around it. If anything, Bitcoin has consistently proven to be the rain that indirectly triggers a wider crash of its immediate industry.
Beyond Bitcoin, if you take a quick scan of all the big cap crypto projects, you will find the list populated by mega centralized exchanges like Binance and FTX as well as layer-one blockchains such as Ethereum, Solana, and Cardano. To make matters worse, the majority of “projects” built on these L1s are those entirely built and functioning in the virtual realm, with a few purported real-world projects mostly filled with hype and little real-world substance.
To cut the story short, blockchain which was supposed to revolutionize everything and impact ordinary people from the Himalayan peaks to the plains of the Sahara desert has in most cases lost its way to being filled with online-only projects and loads of smoke screen hype. There are a few exceptions here and there of course, but the majority of the landscape is disjointed from the real-world struggle of real people whose lives can be bettered with the proper implementation of all the great things blockchain is capable of.
Nigeria and the Role of Emerging Markets
It is no coincidence that Nigeria, Vietnam, the Philippines, Pakistan, and a host of other emerging markets are leading the charge in terms of crypto adoption. If you go to the United States which still has less than 10% of its population dealing with any form of crypto, you have complex systems, deep ecosystems, and nascent technologies that power such great economies. These coupled with a manifold of regulations in every sector of life and business makes the utility of crypto not a thing of urgency. The gaps are far and few and most people who hold crypto do so for speculation purposes, not because the tokens and coins they hold can solve an immediate need that they have.
In Nigeria, on the other hand, the crypto drive has been a bit more practical than when compared to that in developed nations. Nigeria has over 30% of its 200 million population dealing with crypto over the past year alone. This is a significant figure but it is not all roses and gold vases as this is not a straight line indicator that hints at everyday crypto utility currently.
Here are a few points to explain
- Over the past 7 years, Nigeria’s economy has been hit by a multitude of calamities ranging from hyperinflation to the crash in the value of the Nigerian Naira against the US dollar from about NGN195/USD to NGN620/USD.
- A snafu of policy misfires constricted the Nigerian banking system further against Nigerians doing any kind of business with the outside world. Right now, you cannot pay your Spotify subscription, shop on Amazon, or withdraw $100 while traveling abroad with your Nigerian bank-issued Visa or Mastercard.
- If you are a tech freelancer working with foreign firms or want to run a global online business from Nigeria, you cannot accept payment via major payment gateways like PayPal or ApplePay.
- The inflation and crash in Naira have forced millions of Nigerians to seek shelter to preserve their wealth in crypto.
- The constriction of the Nigerian banking industry against international economic activities further pushed millions more into the hands of crypto.
In a nutshell, most Nigerian crypto holders are either saving their money against the endless slide of the Naira, are using crypto to accept or send payments without bank hassle, or are busy speculating on the markets on shitcoins looking for a big win.
You can say that for Nigeria, crypto has some practical/pragmatic purposes, but it is still not yet pervading the everyday life activities of Nigerians in the real sense.
A Win-Win Opportunity for Blockchain and Nigeria
If the blockchain space ever hopes to put a definitive stop to the constant crash in market value, then it needs to have a real purpose in the everyday lives of people. The opportunity for such is nowhere more pronounced than in crypto-amenable emerging markets like Nigeria. The chances of crypto taking root in everyday life here are multiple factors than what is possible in the US, Europe, and other advanced economies. Here, there are major infrastructural, technological, and organizational gaps that blockchain can easily bridge to make the everyday life of people better. Just like crypto is organically creating an alternative banking and monetary sector that makes the life of Nigerians easier, blockchain as the root technology behind crypto can do the same in other important facets of life for Nigerians, such as Utility bill payments, running elections, medical insurance & records, mobility and many more.
As an investor in crypto assets, previous experiences from yourself or what you hear from other people will tell you that the crash comes after the bull run. This happens time and time again because, after the wild optimism and crazy rallies, people begin to look inwards. Is there anything tangible that justifies the value of my portfolio of crypto assets? How many real-world products and services have my token’s team created? How many ordinary users do my preferred projects have? What physical assets, products, and acquisitions back my tokens? In most cases we find ourselves wanting answers to these important questions. Even Bitcoin at such a point looks too high for its worth and before you know it, the FOMO for taking profits set in, and the sell-offs begin.
Blockchain and crypto have largely shed their reputation for being the technology and currencies to buy illegal drugs on the dark web, now they need to take the further step of ridding themselves of being synonymous with scam projects, misplaced hype, and speculation. A technology with so much promise is wallowing in cyclical capitulation and it urgently needs to plug itself into the core purpose of any technology, which is to make the everyday life of ordinary people easier and better. Nigeria and its sister emerging market economies present the best chance, the silver bullet, and saving grace that could usher in a more stable, safer, and less destructive crypto industry. It is incumbent on all major stakeholders, from big exchanges to layer one foundations to focus more resources and technical assistance on projects focused on solving the everyday problems of ordinary people in places where the technology can make the most difference. In the next piece, I will talk about the dos and don’ts of creating viable blockchain-powered real-world products suitable for users in today’s world.
My name is Usman Salis, a pro content writer/strategist, and active community builder and manager. I have worked with over 2000 businesses over the past decade on Fiverr, Upwork, and off-platform and helped them build formidable content that builds presence and traffic with incredible conversion rates. If there’s something I can help you with your business, team, or company, please shoot me an email or hit me up on LinkedIn.