Paxful Research Reveals How Nigerians Are Fighting Devaluation of Native Currency Naira with Bitcoin
The current pandemic has led to a devaluation of Nigeria’s native currency Naira and affected how cryptocurrency trades are conducted in the country.
The current pandemic has led to a devaluation of Nigeria’s native currency Naira and affected how cryptocurrency trades are conducted in the country.
Devaluation of Naira
With the devaluation of Naira (NGN) from 2018 to now, the exchange rate of Naira inflated from 306 NGN to 380 NGN for one USD, a considerable devaluation that has gotten Nigerian business owners worrying about the repercussions and impacts on their companies. The local currency's devaluation means that if one had 1,000 NGN in their savings, for example, the monetary sum would have shrunk to 750 USD with the inflation of Naira - this translates to a staggering 25% decrease for Nigerians.
Speaking to local Nigerian traders and business owners, peer-to-peer Bitcoin market platform Paxful discussed probable solutions and brainstormed how Nigerians could combat the devaluation of Naira during the ongoing pandemic.
Cryptocurrency and Bitcoin hedging
IT consultant Ebuka provided a different perspective to the devaluation of NGN, saying that he had managed to profit a little from the Nigerian currency drop by exchanging his USD funds into Naira.
Trading with foreign currencies like Ebuka and converting USD to NGN is not always an alternative for Nigerian locals, however, as many only earn income in Naira and do not have funds in foreign currencies. With the devaluation of NGN, it has become increasingly difficult for Nigerians to exchange Naira for other currencies due to the inflation in the currency's price. Cryptocurrency trading is therefore a great hedge solution for Nigerians in light of the financial crisis brought upon by COVID-19.
Cross-border trading must be done in a tactful manner, however, and “the focus must be to make small profits first, and not expect to get rich fast overnight,” revealed full-time trader Happy in a discussion with Paxful. She added:
“If you buy BTC at a high rate, be mindful when you hold for too long because any rise in the price of Naira may lead to a fall in BTC price. It's challenging to monitor the prices of both BTC and Naira, but you’ve got to stay alert.”
Despite the devaluation of the foreign currency affecting international trading, another plausible alternative for Nigerians proposed by Ebuka may be income earned through arbitrage. Arbitrage is a practice used by investors where securities and assets are purchased and sold in order to profit from a difference in the asset’s price across various markets.
In order to help Nigerians and the crypto community worldwide achieve financial freedom, Paxful has also come up with an Affiliate Program, which enables an investor to earn Bitcoin (BTC) and 50% of the escrow fee every time they invite “an affiliate” friend to buy Bitcoin on the trading platform.
Image source: Shutterstock
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