Nigerians dominated the Peer-to-Peer (P2P) cryptocurrency sales in Africa in the first four months of the year, recording on average $8 million weekly transactions.
The number of P2P cryptocurrency users in Africa grew by 2000 per cent between January to April 2021, on the world’s largest cryptocurrency exchange, Binance.
Nigeria accounted for the bulk of the transactions due largely to the restriction placed on commercial banks by the Central Bank of Nigeria prohibiting the use of banks for any cryptocurrency related transactions.
A report by Luno and Arcane Research found that Nigeria contributes the most volume of P2P in Sub-Saharan Africa with as much as $8 million in weekly transactions. The crypto market has seen a spike as users migrated from crypto-to-fiat exchanges to peer-to-peer exchanges.
According to a note from Binance, the volume of P2P transactions in Africa surged by 386.93 per cent in just four months with the largest and most used crypto exchange witnessing its P2P user base in Africa grow by 2,228.21 per cent within the same period.
In a survey conducted by Binance, 55 per cent said they invest in crypto as part of a long-term investment strategy, 38 per cent said they don’t trust the current financial system and 31 per cent see crypto as a short-term trading opportunity.
Peer-to-peer refers to the process of buying and selling cryptocurrencies directly between users, without a third party or intermediary. When users buy or sell cryptocurrencies using a traditional exchange, they don’t get to transact directly with the counterparty.
Instead, they use charts and other market aggregators to determine the optimal time to buy, sell, or hold cryptocurrencies. The exchange organises the transaction on their behalf, and the market price determines the final price at the time of the transaction.
However, P2P trading gives users greater control over who they transact with, the pricing and the settlement time. While P2P trading comes with a lot of risks, trading on P2P exchanges instead provides a layer of protection for the buyer and the seller. Exchanges like Binance have created a merchant programme of verified, trusted users, and implemented a feedback or rating system.
The safer users feel about P2P, the more confident they are about using the platform. For traders in African countries where a restriction is placed on traditional exchanges, P2P appears a great option available to trade crypto assets and this informs the increasing migration on the continent.