When I first wrote about cryptocurrency, the article was captioned “The Idiots Guide To the Questions; What Is Cryptocurrency, Bitcoin & Blockchain”.
Yeah, I never wrote it for Nigerians and beginners which means it was a bit technical. But now?
Since there are a lot of Nigerians into crypto now with some coming off a bad history and losses, in this guide to cryptocurrency in Nigeria, I will cut the technical aspects and go to the simple points.
And should you want to know about the technical and cryptography about it I will link extra resources that will help you.
While we’ve shared the best trading platforms for traders, and their comparisons, and the first Bitcoin Transaction in History & address, today, let’s go on to see what cryptocurrency and how it works as a Nigerian.
Check this out: there are lots of Case Studies coming up on Crypto Trading, Investing and securing your digital assets. Click here to get all stories. Also, click the notification bell on top of the page to get case studies, experiments, and real-time Journeys IN CRYPTO.
Observation: this cryptocurrency lesson holds the same facts for any country in the world. Let’s get in.
What is Cryptocurrency and How Does it Work in Nigeria & Everywhere?
A Cryptocurrency is simply an encrypted form of digital currency.
It works in a P2P system – what is known as a person-to-person or peer-to-peer.
That is to say, value is transferred from one address to another when the owner of the sending address digitally signs a transaction using her private key and transmits the signed transaction to the P2P network.
As explained on Wiki, a cryptocurrency (or crypto currency or crypto for short) is a digital asset designed to work as a medium of exchange wherein individual coin ownership records are stored in a ledger existing in a form of a computerized database using strong cryptography to secure transaction records, to control the creation of additional coins, and to verify the transfer of coin ownership.
It typically does not exist in physical form (like paper money) and is typically not issued by a central authority.
[Excluding all technical words] here is how to understand cryptocurrency as a Nigerian and how it works.
Cryptocurrency means “Digital Money”.
Crypto – Digital
Currency – Money.
When you feel confused, just note that cryptocurrency is a digital currency like PayPal Money or Mobile Money.
Because it is digital money, it is fine to understand it is a medium of exchange.
What it means for cryptocurrency to work in a p2p system is, like you transfer money from your GTBank to Zenith bank that is a peer-to-peer transaction.
Furthermore, for you to transfer money to another crypto user, you need what is known as a private key.
The private key here in terms of Crypto is a secret number that allows cryptos to be spent. Every crypto like Bitcoin and other wallets contain one or more private keys, which are saved in the wallet file.
Because the private key is the “ticket” that allows someone to spend bitcoins, it is important that these are kept secret and safe.
Going on, without the private key, you cannot send money or use cryptocurrency as a medium of exchange which is almost the same as your 4 digits transfer pin.
While in Nigeria, a typical bank account transfer pin number has 4 digits, a crypto wallet address or private key has more than 10 comprising of both alphabets and numbers.
Here is an example of a private key. “E9873D79C6D87DC0FB6A5778633389F4453213303DA61F20BD67FC233AA33262”.
How to Understand the Blockchain Technology as a Nigerian
Now when they talk about cryptocurrency transactions being signed to the p2p network, or ownership records being stored in a ledger existing in a form of a computerized database using strong cryptography to secure transaction records this is what they mean.
Call it a P2P network or computerized database stored in a ledger, the original or technical name for the 2 terms is what we call Blockchain.
💡 Quick Note: as you know, a ledger is the principal book or computer file for recording and totaling economic transactions measured in terms of a monetary unit of account by account type, with debits and credits in separate columns and a beginning monetary balance and ending monetary balance for each account.
So, blockchain is where the transaction of cryptocurrency as a medium of exchange is stored in a form of a computerized database.
This computerized database known as the blockchain is open for everyone to see which makes it totally transparent for the sender and the receiver to see the transaction.
💡 Quick Note: in the banking sector, the Blockchain is known as the Bank Statement where all transactions are recorded.
Now apart from both the Sender and Receiver having access to the blockchain, anyone with the Hash ID of the private key can see the transaction.
The Hash ID here signifies having the key or access to the transaction. In the banking sector, it is having access to the Bank Account Statement.
Hash ID – like Bank Statements
While I made a transaction of about N19,000 using the BTC wallet below, if you check it out, you will see the exact transaction on the computerized database which is known as the Blockchain.
How to see your Bitcoin Hash or Transaction ID
- Copy the Wallet Address of the crypto wallet you transacted with –
- Go to Blockchain Explorer – https://www.blockchain.com/explorer – and paste the BTC address, and enter or search.
- Wait for it to load and see your Transaction ID.
- Copy out your transaction ID.
Now, why is Copying out your transaction ID important?
Remember that the blockchain acted as a bank statement, the Hash ID is the receipt you need to show crypto brokers in case you wanted to exchange Bitcoin for Naira.
But don’t worry about it. Why?
You don’t need to stress on how and where to copy out your transaction ID because when you use Binance crypto exchange, they automatically EMAIL YOUR HASH ID when your transaction is completed. See below.
Understanding Cryptocurrency and the Blockchain Technology as Decentralized Systems
Just as we’ve seen above, while in the banking sector, your transaction can be hampered and controlled by the 2 banks involved or worst-case scenario, the CBN steps in to lock up your bank account, with cryptocurrency which is based on the Blockchain Technology, such is impossible because no one can touch or reverse the transactions when sent.
The process of Cryptocurrency and Blockchain Technology been independent is what is known as “Decentralization”.
That is to say, the transaction can’t be controlled or influenced by any third party or authorities as opposed to Nigerian banks which are centralized – controlled by the authorities concerned
Cryptocurrencies and Bitcoin, how do they connect?
Just as GTbank or Zenith is a Bank in Nigeria, Bitcoin is also a cryptocurrency.
Also, just as First Bank of Nigeria Limited was the first and the oldest bank in Nigeria, Bitcoin was the first and the oldest cryptocurrency.
Other examples of cryptocurrencies apart from Bitcoin.
- Ripple Cryptocurrency – like Sterling Bank
- Tron Cryptocurrency – like Polaris Bank
- Ethereum Cryptocurrency – like UBA Bank
- Bitcoin Cash Cryptocurrency – like Access Bank
- Binance Coin Cryptocurrency – like Fidelity Bank
Hope you get the point now?
Cryptocurrencies, Crypto Coins and Altcoins, how do they relate?
Tokens, cryptocurrencies, and other types of digital assets that are not Bitcoin are collectively known as alternative cryptocurrencies – Altcoins.
Also, apart from cryptocurrencies, users can term them as Cryptocoins.
What does Cryptocurrency Mining mean for Nigerians?
Cryptocurrency Mining is just like mining crude oil which means the miners are rewarded for doing the same.
In the same way, in cryptocurrency networks, mining is proving the validity of transactions. For this effort, successful miners obtain new cryptocurrency as a reward.
For instance, when Bitcoin was less popular, people could use their Laptops to mine Bitcoin to their crypto wallets. But now, it is less popular because it is now difficult to do that based on the millions of people trying to achieve the same fit.
So, today if you want to mine cryptos, you will have to pay a company to do that for you – that is if the company is legitimate.
Crypto Wallets to keep your Cryptocurrencies in Nigeria
A crypto enthusiast is not complete until he or she has a crypto wallet. Why is that?
Because whether you want to invest or trade cryptos you need a storehouse to store them. In this term, it is called crypto wallets.
It is worthy to note that all cryptocurrencies have different wallets hence the need to get the crypto wallets for each of them. But never to worry.
A flexible and accommodating crypto wallet that manages more than enough cryptocurrencies as an investment or trading is the Binance crypto wallet or the Trust Wallet.
The Stand of CBN on Cryptocurrency in Nigeria
There a lot of news about cryptocurrency in Nigeria but first off. Cryptocurrencies are legal in Nigeria and have never been banned!
While is it not banned, it is worthy to note that it is not yet officially recognized as a legal tender by the Central Bank of Nigeria (CBN).
Voicing the need for clear directives on cryptocurrencies in Nigeria, Professor Nat Ofo of, Igbinedion University, Okada, said cryptocurrencies and their ancillary blockchain technology had been fingered to revolutionize a lot of industries going forward.
Going on, he said, “We are in the age of the Fourth Industrial Revolution, which is powered by technology.
Cryptocurrencies and its ancillary Blockchain technology have been cited to revolutionize a lot of industries going forward. What is quite evident globally at the moment is that Cryptocurrencies have come to stay.
And just as we highlighted in the host of Bitcoin in Nigeria, while the CBN is yet to give her assertion to cryptos as a legal tender, they’ve made it clear that citizens should steer clear of bad crypto investments – which most of the times are Ponzi schemes and Scams on Telegram.
What is the Future of Cryptocurrency in Nigeria?
A few years ago, everything about cryptocurrency in Nigeria was a myth but not today again.
According to Nairametrics, statistics obtained from usefultulips, a BTC analytic data provider, showed that Nigeria led the pack with more than $34.4 million, while the closest rival, South Africa, had a transactional value of just $15.2 million during the last 90 days.
As documented by Usefultips, in July 2020, the volume of cryptocurrency transactions by Nigerians in Naira-combined (on LocalBitcoins and Paxful) rose to $10Million.
Furthermore, on the future of cryptocurrency in Nigeria, data from Google Trend in the last 3 months [as of the time of writing] showed that the term cryptocurrency had an average of 50 searches per day which translates to hundreds and thousands of searches when a tool like SEMrush is used for the analysis.
Also, with cryptocurrency, the largest Nigerian protests in a generation were powered which was spearheaded by the CEO of Twitter, Jack Dorsey.
As of Oct. 22, when Feminist Coalition stopped taking donations in light of a government curfew that had effectively ended physical protests in Lagos, its summary of accounts showed a bitcoin balance that accounted for around 40% of the $387,000 raised in total.
And just once again, as recorded by Cointelegraph, Nigerians are using bitcoin to bypass trade hurdles with China.
When you combine all the above events, you would have known that cryptocurrencies have saved A LOT of Nigerian youths from unemployment.
So yes, the Cryptocurrency future in Nigeria will only grow without bounds and the cryptocurrency market in Nigeria will soar the more.
Recall that just on LocalBitcoins and Paxful Nigerians traded over $10Million in just July alone. How much more when you compare to other top crypto exchanges they are using like Binance, Luno, Remitano and a lot more.
Additionally, if you go to Binance Nigeria you will discover that Nigerians trade billions of Naira per day in crypto.
And lastly, into Cryptocurrency Investment & Trading in Nigeria
Like investing in the banking sector which the popular one is a fixed deposit, while the banking industry might not give you many interest, in crypto, this kind of investment is known as HODL.
That is, you buy cryptocurrencies and keep in the hope that it will appreciate – just as we saw from Bitcoin history how it moved from $100 to $20,000.
For this kind of investment, the crypto company website I recommend Binance.com with tons of outstanding facilities to use.
Again, it is worthy to note that unlike bank fixed deposit where your money might not tank – fall in value unless the inflation is severe, with cryptocurrency investment, your crypto can fall at a loss to you, and at the same time, you can make more than 1,000% of your savings in profits.
How to Invest in Cryptocurrency in Nigeria – an overview.
I know that Bitcoin is the most popular coin. Be it as it may it is not wise to invest in Bitcoin when the price is high. Hence, the recommended time is when it falls – you buy low and hold it in your Binance Bitcoin wallet.
So if I can’t go for Bitcoin (BTC), then what crypto should I buy?
Go for Altcoins.
Altcoins are other cryptocurrencies apart from Bitcoin.
For instance, some altcoins are less than a dollar. After making your research and seeing which to buy, the next step is to deposit money in your Binance wallet and buy it and hold.
Cryptocurrency Trading in Nigeria – an overview.
Crypto trading is all about buying crypto assets when low and selling when high.
While in crypto investments you buy and hold, in crypto trading, you buy when the market is low and sell when high from whence you will get your profits.
There are many kinds of trading but the popular one is day trading.
Day trading is reading, following, and analyzing the market based on many factors such as trends, coin developments, and etc. and thereby making trades as they go.
Again, there are many types of day trading but without going technical, we have aggressive trading which some know it as scalping.
Scalping is a trading style where you buy and sell cryptos to profit off of small price changes.
For instance, a trader can enter trading point of 20 and sell at 25 or 30. Buy at 32 and sell at 36, buy at 38 and sell at 45 and so on, and of course, with some losses as well if the market goes against in a sharp manner.
How to get started with Crypto Trading Scalping.
I use Binance for my trading, but note, scalping might not be for you if you cannot rule over your emotions to trading.
Scalping ultimately requires that a trader have a strict exit plan because one large loss could eliminate all the small gains you have worked for since morning.
If you can’t scalp, then there is another crypto trading you can make sense of.
This time, while it is still day trading, you can buy a coin at 4am and sell at 9am or 10am, when it appreciates when your stop losses in place.
What is Stop loss: it is just as it is called. It helps to cut down your supposed losses in crypto trading.
For instance, if you bought a coin at point 100 4am and the market went against and the coin moved to point 60.
Now, if you had set a Stop loss at 50 with a proposition such that if the coin moves down to point 50 it should sell at 55.
With Stop-Loss trading order set up, when the coin would have moved down to 50, then a sale would be triggered at 55 thereby cutting your losses down the line.
On the other hand, if the coin rises from 100 to 200+, then the profits are all yours.
But still thinking of making money with crypto trading? Of course I know that Cryptocurrency trading is so dreadful, I get it. Here is how to trade even if you are a beginner.
Here is a sample video on Stop loss.
Frequently Asked Questions about cryptocurrency in Nigeria
Q. Is Cryptocurrency ATM in Nigeria?
A. Yes, there is a crypto ATM in Lagos at Dazey Lounge and Bar.
With the ATM, crypto users can buy Bitcoin using cash. I think withdrawal should be available as well (haven’t used it).
Q. What is the cryptocurrency law in Nigeria like?
A. Crypto is not approved as a legal tender in Nigeria but it is made clear from the CBN that citizens should avoid all forms of cryptocurrencies scammy investments – Quick Rich Schemes.
Q. What are Crypto Transaction Fees?
A. Like bank transfer charges, crypto transaction fees are the fees your crypto transactions incurred depending on the quantity and type of crypto assets transferred.
Q. Is Cryptocurrency banned in Nigeria?
A. No. There has been no time cryptocurrency was banned in Nigeria.
Q. What Happens to my cryptocurrency if I make a mistake with the Crypto Wallet Address of the recipient?
A. When you make a mistake entering a wrong Crypto Wallet Address, unfortunately, the coin you sent to the wrong wallet address can’t be reversed from the blockchain.
Q. Is Cryptocurrency available in Nigeria?
A. Sure, there are a lot of crypto users, traders, investors, and exchanges selling it to the end-users.
Q. Is cryptocurrency accepted in Nigeria?
A. Yes, as far as crypto available in Nigeria, it is also accepted depending on the merchants/company and the products.
Q. Does Binance have Applications for Mobile users?
A. Yes, Binance has many applications for crypto users ranging from android app, iOS, Desktop, and many more for your convenience.
Q. Can I get a Crypto guide book in PDF?
a. Yes, click here to download a free PDF guide on the science of Cryptocurrencies.
Q. Apart from Bitcoin, which other Crypto is popular?
A. Ethereum (ETH). Ethereum is second to Bitcoin with many reasons.