Alternative Ways Nigerians Are Buying Bitcoin after the CBN Ban

In February 2021, the Central bank of Nigeria (CBN) issued a directive to banks and other financial institutions restricting them from engaging in cryptocurrency transactions, and also from facilitating payment for cryptocurrency exchanges. The CBN also instructed banks and other financial institutions to identify entities and individuals that operate cryptocurrency exchanges or carry out cryptocurrency transactions.

This was a big blow to the rapidly growing cryptocurrency market in Nigeria.

In recent times, Nigerians, especially the youths have embraced trading cryptocurrency, as a means of livelihood. The huge gains recorded by bitcoins have also attracted non-traders to the suitability and possibility of using cryptocurrency in hedging against inflation.

While some stakeholders supported the CBN’s directive, others questioned it. Many saw it as effectively taking away the livelihood of many Nigerians trying to earn a living for themselves through cryptocurrency trading. And even though the CBN has claimed that it did not ban cryptocurrency activities in Nigeria but only prohibited cryptocurrency transactions in the banking sector, the effect of the prohibition is been felt by many, and many bank accounts have been closed/blocked since the CBN released the circular.

The CBN circular to the banks can be seen here, and the press release can be seen here.

Bitcoin transactions are not slowing down though…

Nigerians are a very resilient set of people that will always find a way(s) around obstacles. As a result, despite the ban, statistics show that Nigerians are finding other means of buying and selling major cryptocurrencies like Bitcoin and Ethereum. Data from UsefulTulips shows an increase in peer-to-peer trading of bitcoins in Nigeria since the CBN gave the directive to the banks. According to data from UsefulTulips, in the last 30 days alone, Nigerians have moved about $34 million worth of Bitcoins on two major peer-to-peer trading platforms – Paxful and LocalBitcoins.

By the way, UsefulTulips is a website that analyses bitcoin trading activities on popular peer-to-peer trading websites.

Cryptocurrency Peer-to-Peer trading

Peer-To-Peer (P2P) trading involves buying and selling directly between individuals without a third party or intermediary.

Traditionally, when you buy/sell cryptocurrency on exchanges, you don’t have to interact directly with the person you are buying from or selling to – the exchange ‘organizes’ the trade for you. Most times they just buy from or sell to you, and then when another entity wants to buy/sell, they do the same thing.

With P2P, buyers and sellers interact directly. A buyer looks for someone interested in selling, and a seller looks for someone interested in buying, they agree on the rates, and the transaction is carried out. While this has an advantage in that you can determine who you sell to or buy from, and fees are reduced since no third party is involved, it does carry some risks. Risks like fraudulent traders not fulfilling their end of the deal are high.

Despite these risks, Nigerians have embraced peer-to-peer trading as the alternate method of buying and selling Bitcoins and other cryptocurrencies.

Safety in cryptocurrency peer-to-peer trading platforms

Peer-to-Peer trading platforms have always been in existence alongside traditional exchanges. They provide some form of safety for P2P traders by holding the monies for the transactions in escrow accounts until the transactions are confirmed by both parties. it is after confirmation that the money is released to whoever needs to receive it. Examples of these platforms include Paxful and LocalBitcoins.

After the CBN directive was given, traditional exchanges have begun to include and enable P2P trading on their platforms. This is not too surprising as they have to look for other ways to serve their customers.

Six recommended peer-to-peer trading platforms.

As mentioned earlier, despite the risk in p2p trading, Nigerians have embraced this as the alternative means of buying bitcoins and other cryptocurrencies for the time being. And with several P2P platforms out there, and in addition to the fact that many exchanges are beginning to enable P2P trading, here are some peer-to-peer platforms that I recommend.

  1. Nairaex

My first foray into the world of cryptocurrency was in the year 2016/2017 when I earned some money from some of my activities on the internet. I got paid in bitcoins and through nairaex, I was able to convert my BTC to naira. Since then, nairaex has been my go-to platform for buying and selling bitcoins and ethereum. They have since evolved from when I first used them – becoming more robust and offering more services.

After the CBN directive in February, they have enabled peer-to-peer trading on their platform, and based on track record, they are still my first choice for buying and selling cryptocurrency.

Visit the nairaex website here

  1. Paxful

About two years ago, I had some google play gift cards I wanted to exchange for bitcoins, Paxful was the platform I used for that at the time. There are also many positive reviews about Paxful from many who use it consistently. Paxful has been one of the very popular P2P platforms exiting since 2015.

See what Paxful has to offer here

  1. Binance

Binance is a traditional cryptocurrency exchange that also offers P2P trading on the platform. It has been a popular cryptocurrency trading platform for a lot of youths in Nigeria long before the CBN restrictions, so including P2P transactions on the exchange was just a natural progression.

To visit the Binance website, click here

  1. Quidax 

This is another cryptocurrency exchange that has enabled P2P transactions on their platform. I have not used this platform personally, but popular YouTuber Fisayo Fosudo mentioned he has traded on the platform and he recommends the platform. You can check out his channel here Fisayo Fosudo – YouTube

Quidax website can be accessed here

  1. Buycoins

I registered on Buycoins in 2019 after a friend introduced it to me. Though I have also not carried out any transactions on this platform, I know some people who carry out cryptocurrency transactions on the platform.

Check it out is at Buycoins

  1. Bitzaddy

Finally, I am throwing this in here. This website is owned and run by a guy I know personally. He trades bitcoins and deals in gift cards. Here it’s typical P2P as you are dealing directly with the seller/Buyer and nothing is been held in escrow, but he has been reliable and offers very good rates, and is worth checking out.

Bitzaddy is at https://bitzaddy.com

Conclusion

So, there you have it. As long as the CBN directives to the banks remain in force, peer-to-peer transactions remain the best alternative for Nigerians. The introduction of escrow accounts by the P2P platforms has made P2P trading a little safer and reduced the risk of fraud. And so I believe you can’t go wrong with any of the platforms listed above.

One comment

  1. Wooooow, thanks so much….
    You took your time to do this. Quite informative. I’ll be exploring my options as I now know other trading platforms. 👌

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