Tens of thousands of Nigerians have turned to investing in cryptocurrencies, particularly Bitcoin, to help them improve their earnings as well as earn a decent living.
Several Nigerians have made a fortune from the trade and this phenomenon has encouraged many others to take it up in the hope that they may also strike it rich. Nigeria is the world’s second-largest Bitcoin market after the U.S.
Investment in cryptocurrencies in Nigeria is booming despite several challenges, not least the restrictions imposed by the central bank.
Kunle Lawal is an IT and communications consultant based in the capital Abuja and a seasoned crypto investor who has profited from the trade building his portfolio from “a couple of thousands of dollars” to “hundreds of thousands of dollars”.
He balances his full-time job with training and educating other people on investing in cryptocurrencies. While he encourages people to get into the trade, he is also keen to ensure that they are aware of the dangers of the market, especially its volatility.
In that respect, Lawal cautioned potential investors of getting “caught between making a lot of money and losing a lot of money”.
“You have to be always watchful to see how the market is moving. Like I always tell my friends, if you snooze in cryptocurrency, you lose. So you try not to snooze so you don’t lose; so you always be on the alert,” Lawal said.
“You never know the market. You always think the market is going to go this way and it goes the other way.”
“Today you could be up 100 percent and the next moment you could be down 40 percent. That can keep going down, leading you to about minus 10 percent”.
Lawal, who was introduced to cryptocurrency way back in 2009 in Cyprus, said patience and research are some of the keys to mastering trading in the crypto market.
“You get to see a coin going up (in value) and you don’t want to miss out and then you jump on it, and immediately it starts tipping. It is an emotional thing and I must admit it is very, very hard to control.”
Lawal said these two aspects can help investors avoid a major challenge christened as FOMO (Fear Of Missing Out).
“Despite the fact that you find yourself doing it over the years, you always come back to find yourself ‘FOMO-ing’ into all these coins, and you look back and say ‘I knew this was going to happen, why did I jump in?’,” he said.
Lawal conceded that investing in cryptocurrency should be one of a number of avenues, not the only one that people should explore if they are investing their hard-earned money.
“It is an opportunity to make a lot of money but please let us settle this; I am not a financial advisor. I am not telling you to carry all your money to put in cryptocurrency. That is why it is always important to do your own research,” he noted.
In February, Nigerians were outraged after the Central Bank of Nigeria (CBN) released a statement apparently ordering financial institutions to close all accounts associated with cryptocurrency trading.
The CBN through its deputy governor Adamu Lamtek reset the directive clarifying that the regulator did not place restrictions on use of cryptocurrencies and was not discouraging people from trading in them.
“What we have just done was to prohibit transactions on cryptocurrencies in the banking sector,” Lamtek said in March.
Global cryptocurrency trading platform Paxful recently announced that despite that ban, Nigeria had become the biggest market for bitcoin and cryptocurrency on its exchange.
The ban forced Nigerians to seek exchanges offering peer-to-peer (P2P) transactions now the most used feature by crypto investors as it lowers fees paid to crypto exchanges.
Lawal said it was time the CBN accept the reality that cryptocurrency has come to stay, adding that he understood though why it sought to protect Nigerian citizens from the risks of cryptocurrencies.
“Every good thing that comes into this world has its bad side. They are looking at people using it as a means to move phones. They are looking at criminal activities; currently, the Yahoo Boys are using it to defraud people and, also, move phones, and this is always untraceable.”
Yahoo Boys is a term in Nigeria used to refer to young men who use the internet to defraud unsuspecting ‘clients’ of their money in various scams.
These scammers are notorious for trying to pass themselves off as people in financial need, persons searching for love online or Nigerian princes offering an outstanding return on an investment.
Cryptocurrencies are illegal in many countries but Lawal is optimistic that with time it will become an accepted means of payment and even a store of value.
He maintained that cryptocurrencies have the capacity to change the face of the continent and the world, in general.
He also predicted that decentralized finance (DeFi), which uses cryptocurrency and blockchain technology to manage financial transactions, will be “a way of banking the unbanked”.
“I see it as something that is going to be really, really huge in the world and I see it affecting the African market.”
“The future of cryptocurrency in Africa is great. We are seeing a lot of people coming in. Like I said, we are about the one percent that are lucky to currently be in cryptocurrency, and it has a huge network effect. I see it growing and growing, I see a lot of Africans getting involved.”