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(People waiting at Zenith Bank’s ATM in Lagos, Nigeria / Nodo News)

There have been long queues in Nigeria’s commercial capital Lagos for several weeks now, as the central bank’s deadline to replace old banknotes with new ones draws closer.

Outside many banks we visited in the city, we encountered thousands of anxious citizens waiting to exchange their notes. And yet the redesign of the naira has not helped calm its plunge. It has led to more plummeting against the US dollar since December 2022.

It is this weakening of the naira, and the rampant inflation that has got more Nigerians into crypto to hedge against the volatility of the currency. The only other option has been to change naira to US dollars but the black market rate is too high for most Nigerians. US dollars remain scarce in Lagos.

The black market rate was 755 naira per US dollar on Feb. 8 while the central bank rate was 460 on Feb. 9.

Why More Nigerians Are Drifting to Crypto

(The exchange rate shown on a monitor in a Lagos hotel’s elevator on Feb. 7 / Nodo News)

So untenable has the naira been that in May 2022, Nigerian president, Mohammadu Buhari announced the launch of the eNaira, a blockchain-driven digital currency regulated by the Central Bank of Nigeria.

The government had imposed stiffened regulations on the currency, while the Central Bank of Nigeria, was constantly revising the US dollar spending limits. This is pushing many Nigerians to favor cryptocurrencies due to their ubiquity.

Africa’s most populous country is also the continent’s top crypto destination with crypto marketplace Paxful data showing that Nigeria’s peer-to-peer bitcoin traded volumes rose to over $1.1 billion between January 2021 and June 2022.

Nigeria is Africa’s Crypto Engine

Data from Truzact, another peer-to-peer platfrom, indicated that Nigerians traded more than $5 million worth of bitcoins last August alone. That was a more than 250% growth within the period under review. “Nobody wants to have a million naira worth $2,000 today and then tomorrow, your one million naira is now worth $1,500,” Igwe Chrisent, founder of Truzact told Voice of America. “So, everybody is basically trying to hedge against the dollar.”

According to Chainalysis, a blockchain forensics firm, Africa’s cryptocurrency market grew by over 1200% between 2020 and 2021.

Nigeria ranks 11th in the world in a list of the top 10 countries’ trading volumes in crypto by Chainalysis. There are over 10 million crypto holders in Nigeria now. The west African nation controls 40.5% of Africa’s crypto transactions.