Today, the number of Nigerian companies accepting crypto payments and exploiting blockchain opportunities is also on the rise. For example, GSm2me, mobile airtime and SMS bundle platforms accept bitcoin as a legal tender. Minku, an online shop is another example of how customers can buy fashion items and leather accessories.
There is no doubt that cryptocurrencies offer an economic alternative to the fiat scheme, but in the absence of a functioning trading and exchange system, the possibility of fully leveraging the progress can’t be made. Thankfully, Nigeria boasts a fair share of local platforms that support the purchase and sale of digital coins with a national currency, Naira.
For those looking to trade bitcoins in Nigeria, understanding the current state of cryptocurrency and blockchain markets in 2020 is a key determinant of your trading decision. Let’s find out about a few of the game changers and trends.
- Binance Support: As part of ongoing fiat-to-crypto advancements Binance added support for the Nigerian Naira (NGN) early in March 2020 . This integration allows traders in Nigeria to directly buy and sell coins like Bitcoin, Ether (ETH) and stablecoin Tether (USDT).
- Bitcoin ATM introduction: In April 2020, Blockstale BTM launched the first ATM in Nigeria, making it the 8th African country to welcome the machine. The blockchain-based company also promises to install over 30 more terminals across Nigeria.
- Money transfers are the firestorm of Nigeria’s fintech: Digital money transfer market is important, both for providers and for the economic growth in Nigeria. According to CBN. Remittances, for example, were worth twenty-two billion dollars in 2017, accounting for 5.6 percent of Nigeria's Gross Domestic Product. and more than the country's oil sales. Also, according to the World Bank, high cost of remittances (with an average cost of 9.4% for sending two hundred dollars to Nigeria) gives younger FX providers the ability to offer safe and cost-effective money transfers to a ready client base.
How to Trade Bitcoin in Nigeria
If you’re living in Nigeria and considering investing in bitcoins, then there are 4 best strategies to use. These include HODL, hedging, and trading (trend or breakout ). In this section, we will have a look at their features and also touch on their limitations.
1. Bitcoin HOLDling
It all started in January 2013 following a spike in bitcoin prices from below $15 to prices well over $1100 by the month of December that year. Still in December that year, on the 18th, there was a 39% plunge of prices. Then, an internet post ‘I am hodling’ instead of ‘holding' was made by a member under the name Game Kyuubi and the term ‘hodling’ today stands as the ‘favourite mantra’ of crypto traders. It simply implies the withholding of the currency rather than choosing to sell.
It is a simple and common strategy that can be applied by basically any trader whether new to the crypto trading system or not. Here, investing in a large sum is not necessary. The buyer is only looking out for an increase over a long term. Buyers who ‘hodl’ only need an affordable purchase as compared to short term, then they wait for the right time to sell when the gains are favourable. Traders ‘hodl’ onto currencies as there have been such cases where withheld assets gain higher value over time and become more profitable.
Limitations
In critical cases where prices do not skyrocket as hoped, traders are forced to sell assets which may go for far lesser than they initially bargained and losses are tragic for any trading system. The crypto market is unpredictable and with increase and decrease in price, there is also the point of change in trending currencies which affect long term traders majorly.
Withheld currencies do not just lose value, they decline as other currencies begin to circulate and trend. Long term traders tend to overlook fruitful earning opportunities with the hopes that in time, better chances are to come and where better opportunities do not arise, losses are made.
2.Hedging
This crypto strategy rather deals with selling currencies than withholding. Here, assets are bought and sold on a short term basis, deliberately creating room for quick and easy on-the-go profit-making. Just like the previous strategy, hedging has its various advantages and disadvantages.
By selling assets over short term periods, losses of certain sales are put off by profits at other sales. Simply, it is a good way to bear losses but still make a larger profit to offset the losses. The bitcoin market has its ups and downs but with hedging, the buyer takes advantage of the current system involving the increasing and decreasing rates. He’s able to pick out the best time to short-sell ( ie. selling an asset and buying it back later on but at a lower price thereby making relevant gains) then makes a quick profit and further, less loss.
Binary options are methods set up to predict short term price decline or increase. With these options, hedgers look at the market from the future, make smart choices in buying and selling and furthermore, avoid risks.
Limitations
Hedging is a strategy built up to avoid risk but with the deterrence of risk, there is an equal deterrence of profit. It appears to be a strategy aimed at avoiding risk rather than making profit which in some way accounts as a loss altogether.
Hedging is a delicate strategy of quick-thinking where one wrong move can jeopardize the overall potentiality of gains. The sensitivity of this strategy puts losing at a higher chance for those lacking certain expertise on proper business planning and efficient decision-making skills. Therefore, profitable hedging is carried out by the well trained rather than just any crypto trader.
3. Bitcoin Trend Trading
Trend trading is a method of crypto trading where the behaviour of the BTC market as well as other currencies are carefully analyzed and taken advantage of by marketers. An example is, in the year 2017 when the price of bitcoin almost reached $20000 per BTC, the currency grew in the market as well as popularity.
Like other currencies, when a study of the price increase and decrease is accomplished sellers can easily handle strategies to ensure prevention of risk and more importantly, successful profit. The trend of the market sets a higher chance of profit as the rate of increase and decrease is relevant and statistically on display for potential marketers making planning and decision making easier.
Trend trading reduces risks for even those with little expertise making profit an easier gain for a majority. The unpredictability of the market reduces since a somewhat defined system is put in place making both buying and selling more organized and systematic.
Limitations
Relying on a trend is uncertain, especially when the market crashes and leads to a rapid decline of gains by the trader. For long term traders, if the trend of the system is altered in any way, it may account for tragic losses. Common amongst traders new to the market, during these trending times, they adopt certain systems which they attempt to try even with the erosion of the defined market behaviour and this could lead to more losses.
4. Bitcoin Breakout Trading
This practice of trading happens when a trader enters the market at a point where prices move outside a defined range (support or resistance). Although all this appears like a good time to invest, this sort of trading bears certain losses following gains.
With favourable prices following a breakout, traders stand a high chance of making a profit by advancing into the trading system. During a breakout, trends are set and even build more suitably as time goes on, this allows traders to operate on a safe sphere as long as the breakout occurs. Risks are limited during these times according to the nature of the breakout.
Limitations
False breakouts. Although this strategy seems to be almost too sweet of a deal, some breakouts decline often causing losses due to several reasons preventing the system from building further. Poor market analysis of a breakout can, in turn, wreak a trader during a period meant for deep study in order to recover fruitful profit.
Although this form of trading requires precise analysis before advancing, traders may go too far in ensuring no risks are born making the reward ratio decline with the low-risk ratio.
8 Best Exchanges for Trading Bitcoins in NigeriA
Founded in 2014 by Babylon Solutions Limited and is incorporated and headquartered in Seychelles. It supports over 30 countries globally, having one of the largest exchanges in Nigeria, Vietnam and Malaysia. They deal with bitcoin, Bitcoin Cash, Tether, Ethereum etc..It supports management of both fiat and cryptocurrencies and spans over wide geographic territories, including China, USA, In some geographical areas, there is a low percentage of crypto traders leading to low levels of liquidity.
It is a UK based exchange platform that spans across over 40 European countries and several others, totalling four continents. It was formerly known as BitX but later rebranded as Luno. Although it is mostly used in Nigeria and South Africa, there are certain positives and negatives to this platform. Wide geographical range. It produces educational information on crypto trading via its learning portal. Dual cryptocurrency system (Ethereum and Bitcoin). Currently unregulated.
It is an African exchange platform. It was launched on the 1st of August, 2018 but managed to become one of the top three exchange platforms in Nigeria. Instant and direct coin sales. Easy payment system. The limited geographical span of operation. Restricted fiat currency support system (they currently operate with one fiat currency; Naira).
Formerly branded as Ngexchanger, it has been under operations for over 3 years. It is a legitimate crypto exchange platform for Nigerians. It engages in transactions with a wide range of cryptocurrencies. Referral programs offer traders a chance to gain extra cash. Account verification takes about 48 hours to process. Bitcoin is the only cryptocurrency.
The leading crypto exchange platform in Nigeria. It supports payment and withdrawal with any Nigerian bank and as good as this platform appears it has its good and bad side. Easy payment from anywhere in Nigeria. Zero trading fees are charged. Restricted geographical range. One Fiat currency operation.
Founded by Jeremias Kangas and based in Helsinki, Finland. Its aim involves the trade of local currency for bitcoins. It possesses certain advantages and disadvantages as well. It provides traders with many methods of payment. It is a successful Bitcoin trading platform and has been for a long period of time therefore, it is legitimate and trustworthy. Accessible to fraudulent activities Level of liquidity is dependent on the percentage of traders in a particular area.
It is an exchange platform located in Lekki, Lagos, Nigeria. It is associated with Alpha-Bits Trading S.D.N. It was founded by Kanayochukeu Eze in October 2017. Single country operation. Easy payment methods. One cryptocurrency and one Fiat currency. Easy to operate interface where anyone can be a buyer or seller.
A US-based cryptocurrency exchange platform founded by Jesse Powell in the year 2011 and offers futures contracts and margin trading services along with crypto exchange. Relatively low trading fees. Supports a wide range of cryptocurrencies (20 currencies). Complex interface. Verification takes up to 5 days.
