26 sats \ 6 replies \ @siggy47 12 Oct 2022 \ on: A Year After Nigeria Launched It to Counter Bitcoin, the eNaira Is a Failure bitcoin
I hope this article is accurate, but it seems long on pro bitcoin cheerleading and short on facts. Specifically, I would like to know the naira/bitcoin exchange rate with a one year chart. It's possible bitcoin is appreciating against the naira, but I would like some numbers.
Bitcoin is down big, year-over-year. You know that. And that drop was way worse than the USD/NGN over that same time period. You likely know that as well.
Anyway, the numbers from the article you may have overlooked is the street rate. That is the conversion rate for when someone sends money to Nigeria. They are only getting the official rate (USD/NGN 434), whereas they should be getting nearly 70% more (the fair market / street rate).
The other number you may have overlooked is the 900,000 downloads. That is 900,000 downloads in a country of somewhere around 125 million adults. Thus even if every one of those downloads is an active user (which is not the case), that still would mean there is less than 1% of the adult adoption using the eNaira.
From a comment from another post:
The e-Naira has been out for almost a year now ... and they've seen something like a quarter of a million transactions, and have only slightly more than a quarter of a million active users (subscribers). That means on average one transaction per user per year.Stated another way: Dead On Arrival
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Yes I know the price of bitcoin is down (of course) The reason for my reply is this language:
"But the more the Bitcoin price rises, the more the Nigerian population is tempted to buy it."
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That's a fair critique. Bitcoin's use case as a store of value really only applies over the long term (e.g,. 5+ years). When price discovery happens and the bitcoin exchange rate spikes, there is an elevated risk of a similar (or greater) sized selloff. Even intraday volatility sometimes can make bitcoin painful to hold.
But the naira very likely is, for the foreseeable future, going to continue losing value over time, due to various factors including the current political, economic and social situations in the country.
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I am curious. Would the typical Nigerian bitcoin buyer be using a dollar based stablecoin to buy? I really hope that as the US federal reserve action destroys developing country's fiat, bitcoin can actually appreciate in the local currency even if the USD value declines or remains stagnant.
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Would the typical Nigerian bitcoin buyer be using a dollar based stablecoin to buy?
Buying bitcoin in Nigeria is occurring mostly via P2P trade, and from other methods that don't involve the banking network. There is an elevated amount of shitcoin and NFT platforms pushed in Sub-Saharan Africa (e.g., from Binance, Celo, and soon Mara). So some of those have stablecoins which are used to avoid exchange rate volatility.
I don't know the breakdown as to the ratio of bitcoiners using fiat to buy bitcoin versus using a stablecoin. There's relatively few people who run a node, so their bitcoin are oftentimes kept on exchanges like Paxful, Binance, and even regional exchanges like Bitmama. Some do self-custody their bitcoin and shitcoins though. There was (maybe still is) the situation where police were seeing bitcoin / crypto wallets and confiscating those funds, which was one of the contributing factors for the ENDSARS protests a couple years ago which resulted in a violent crackdown.
One thing that is different from the West is the number of people who do not have a bank account. And when sending money person-to-person, the transaction size may be small (e.g., $5, or $2 and less even). So that's why Lightning network holds so much promise.
I really hope that as the US federal reserve action destroys developing country's fiat,
That outcome is becoming more and more likely. I think the only question is how and when the government responds. Zimbabwe is on like their fourth currency now in the past a decade and a half, including a period where they used USD.
But such a crisis destabilizes the nation, and there already are violent conflicts and division. So it's not that I want to see anyone's fiat holdings be destroyed, I just know that the situation is such that there is likely nothing that will stop the local currency from continuing to lose value, and whatever confidence in the currency people retain today will be completely lost over time. I'ld like to think people will adopt bitcoin, but I suspect there will be a pivot to dollars first, or maybe China, believe it or not, ends up seeing their CBDC gain traction in parts of Africa too.
It's really not possible to have even a clue what the future holds.
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Thank you for that fantastic response. I learned a lot
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