Convexity, a leading blockchain solutions and consulting firm, has unveiled a comprehensive report that delves into the intricate dynamics of the day-to-day cryptocurrency peer-to-peer (P2P) market in Nigeria, the largest crypto market in Africa.

In Nigeria, P2P markets have gained significant popularity as a means of buying and selling cryptocurrencies. These platforms facilitate direct trading between users, bypassing the need for intermediaries. This cost-effective and convenient approach has become especially relevant due to regulatory restrictions that hinder more conventional cryptocurrency transactions.

A notable aspect highlighted in the Convexity report is the significant shift in trade volume and adoption patterns over recent years. Nigeria held the global ranking of third place in 2020, which subsequently dropped to the 18th position in 2021, and marginally improved to the 17th spot in 2022. This decline can be attributed to the challenging operating environment that the Nigerian crypto industry has faced.

Despite this downward trend, the Convexity report underscores Nigeria’s status as a significant player in the African cryptocurrency adoption landscape. The study was conducted through interviews and surveys targeting key industry stakeholders including founders, investors, and experienced traders, with an average industry tenure of over four years.

The report underscores that Nigeria remains a notable hub for cryptocurrency adoption within Africa, even amidst regulatory uncertainties and infrastructural hurdles. One driving factor behind this phenomenon is the use of cryptocurrencies for remittances. Nigeria, second only to Egypt, stands as Africa’s largest recipient of remittances, according to World Bank data. The high costs associated with traditional remittance channels have encouraged the exploration of cryptocurrencies as an alternative, a trend boosted by their swifter transaction speeds.

Furthermore, the report underscores the role of rampant inflation in the Nigerian economy. Over the past decade, the Nigerian Naira has experienced severe inflation, resulting in a substantial loss of value against major global currencies like the US dollar. This devaluation has fueled a surge in demand for stablecoins such as USDT, which are pegged to the US dollar and offer a secure store of value. Fluctuations in the exchange rate between the Naira and USDT reflect the evolving demand-supply dynamics between the two currencies.

Cryptocurrencies have emerged as an attractive safeguard for Nigerians seeking to shield their savings from runaway inflation. The report also emphasizes that Nigeria’s predominantly youthful population contributes significantly to the nation’s growing interest in cryptocurrencies. Young Nigerians view digital currencies as a means of investment and transactions, further propelling the adoption of cryptocurrencies for payments.