Bitcoin (BTC) may be a decentralized cryptocurrency, but that does not mean that its price is the same worldwide. It is normal to have slight variations between countries, but on Friday (26) Nigeria traded the digital asset at more than US $ 87,000, almost double the world average.
According to data from the Bitcoin Price Map, a platform that aggregates crypto prices around the world, Nigeria is the country where the currency is more expensive. This happens after the local government has banned cryptocurrencies, causing the population to turn to the parallel and inflated market for digital assets.
Prices have risen exponentially according to the difficulties that exist in the country to trade bitcoin today. Exchanges, exchanges and payment platforms operating in Nigeria cannot transact crypto in any way.
Although the ways that the population has developed to circumvent the prohibitions are uncertain, a parallel and illegal market has formed in the country. Bitcoin was traded at more than $ 87,000 today, a record price worldwide.
The situation of cryptocurrencies in Nigeria
On February 5, 2021, the Central Bank of Nigeria (CBN) released a letter addressed to banks and other financial institutions prohibiting trading or any type of transactions involving cryptocurrencies. The authorities also forced the closing of accounts of legal entities and individuals who held digital currencies.
Not surprisingly, the letter generated great concern in the market, especially in the area of startups and fintechs. After much criticism, CBN issued yet another statement stating the reasons behind its decision.
The Central Bank of Nigeria explained that cryptocurrencies are issued by “unregulated and licensed entities” to operate in the country. The government then identified an illegal financial resource in digital currencies.
Another point raised is the controversial issue of “anonymity” that cryptocurrencies would give to their users, making them susceptible to illegal activities, such as money laundering and financing of criminal groups. Finally, CBN stated that digital assets are very volatile and that they would offer risks to the national financial structure.
The reasons parallel to the decision
The adoption of cryptoactives by the Nigerian population has only grown in recent years. In the face of inflation, unstable currency and the people’s desire for internationalization, bitcoin and other digital currencies are seen as a way of economic freedom. However, the control that governments seek to have over the national economy is weakened by the widespread adoption of digital assets.
Throughout 2020, a wave of protests hit Nigeria and bitcoin played a very important role in funding the organizers. Many local and international donations were made through cryptocurrencies to Protestant groups, until the Nigerian government closed bank accounts linked to the organizations.
At the time, cryptocurrencies were what kept the protests alive through crowdfunding. Until the beginning of February this year, the Central Bank of Nigeria adopted one of the toughest restrictions on the use of cryptocurrencies ever taken worldwide.
Other countries experience similar effects
These effects also happen in countries like Malaysia, Argentina and South Africa, where, for whatever reasons, bitcoin’s supply and demand is affected. For example, Argentina is facing a severe economic crisis and the population has been restricted from buying dollars so that national reserves are not depleted in the face of high inflation and dollarization of trade.
As a result, bitcoin and other cryptocurrencies are sold by Argentine exchanges at prices higher than the global average in the face of increased demand. More and more crypto are being seen as viable options for reserving value that people around the world can access to protect themselves from unstable fiat currencies and inflation.
With information: Cointelegraph, CoinDesk