How to legally trade Cryptocurrency in Nigeria and be safe
Following the Central Bank of Nigeria ban on Crypto transactions in Nigeria, legal trade (buy and sell) of cryptocurrency has become difficult. However, you can still buy and sell Bitcoin (BTC), Ethereum (ETH), Tether (USDT), Binance Coin (BNB) Market, Cardano (ADA), Dogecoin (DOGE), XRP (XRP), USD Coin (USDC) and other Crypto currencies legally in Nigeria without getting burnt by the government.
After the ‘CBN ban’, Banks have mandated to close all accounts linked to crypto exchanges. This means it is impossible for Nigerians to buy Bitcoin or any coin Crpyto exchanges using debit card or directly from their bank accounts. Nigerians who engaged in Crypto exchanges after this instruction, have experienced a restriction on their bank accounts, as banks have been freezing accounts of defaulters. In spite of this, there has been a surge in the trade and use of Cryptocurrency in the country, amongst the Youth. This means more and more Nigerians are coming into the crypto space, as shown by a statistics provided by Usefultulips (a bitcoin analytic data provider). On just Paxful, it was reported that Nigerians moved over 100 million worth of Bitcoins; that’s only Bitcoin, when there are several coins daily traded by Nigerians.
How are Nigerians currently trading crypto safely in a country where fraudsters are scamming people and her government sees crypto as illegal tender, forbade financial institutions including crypto Fintechs from dealing in digital coins?
- Peer to Peer Crypto Exchanges
- Patronizing local Crypto companies
- Family & Friends in Diaspora
- Platforms you can safely trade crypto in Nigeria
- Pros and Cons of Peer-to-Peer(P2P) Exchanges
Peer to Peer Crypto Exchanges
Peer to Peer exchange also called P2P exchange is a term that refers to buying and selling of crypto coins between buyers & sellers over a medium called Crypto exchange. As the name implies, peer-to-peer exchange means two people are involved – the buyer and seller. A crypto exchange is a company that allow users to interchange crypto assets in form of coins (Bitcoin, Etherum, Alt Coin,etc) for fiat money (NGR, USD, etc). These Crypto exchanges act as a middleman in a p2p exchange; popular ones are Binance (world’s largest exchange), Remitano, etc.
How does this work
These platforms act as an escrow marketplace which protects both buyers and sellers from being defrauded by any of the parties. An escrow is an asset kept temporarily with a third party until a condition has been fulfilled before it is released. So p2p, when a buyer places an order to buy a coin, he sends money to the seller. However, the seller doesn’t receive the money until the buyer confirms on the platform that he/she has received the coins.
• To the seller — that they will receive payment for the cryptocurrency;
• To the buyer — confidence that the seller will not run off with their money and they will receive his cryptocurrency.
If a dispute between the buyer and the seller arises, representatives of the platform intervene in the transaction who act as independent arbitrators. Platform employees act strictly in accordance with the rules of the company, and will carefully study all the information provided by the parties.
What to look for in a P2P Exchange
The things to look for in a peer to peer exchange are similar to what you would look for in a centralized exchange: security, trading fees, volume, and payment methods.
There are already safety measures in place by crypto exchanges held in escrow, but you are responsible for looking at a buyer or seller’s profile and ratings to determine whether they are a reliable person to deal with. You should always watch out for a verified seller.
Some P2P exchanges actually have no fees for buying or selling on their platforms; you only pay a fee if you advertise on the site. When there are fees it is generally 1% or less, total, and often is only on the seller side. The only time there are generally higher fees is when using an alternative payment method.
This is something that varies not only by exchange, but also by seller. Some sellers may only accept certain methods of payments that are more in line with centralized exchanges, such as bank transfers, credit or debit cards, or crypto. Other sellers may accept completely different methods such as PayPal, gift cards, rewards points, and even goods and services
Note: You shouldn’t use any crypto narration when using bank transfer in Nigeria. You and the seller should agree on what should be the narrative so as to identify you when payment is made.
The direct nature of a P2P exchange means that there are likely not as many users on the sites and therefore there is less trading volume. If you are hoping to have a buy or sell offer filled quickly on a P2P exchange you will want to check to see which ones generate the most traffic and therefore the most volume, otherwise you may be waiting a long time to make a trade.
Many successful trades have been reported with the help of this Escrow service fostering smooth p2p transaction on these Exchanges.
Patronizing local Crypto companies
Local crypto companies like Patricia enable Nigerians to buy/sell their crypto assets easily without clashing with CBN’s directive within their apps. You have a local wallet within their platforms, where your money is stored. Crypto assets are converted to naira within their platforms and vice versa. For a platform like Patricia, they only deal in BTC.
They also deal in converting your gift card to crypto & vice versa and use it for transactions.
Family & Friends in Diaspora
Another safe way to trade crypto is to buy crypto assets/coins using your friends and families abroad. Since they can buy in dollar or any currency, you can send money to them; they will convert to currency used in that country and then purchase digital coins for you, after which they send to your wallet address. This is very safe, though based on trust.
Platforms you can safely trade crypto in Nigeria
There are many crypto exchange companies offering p2p crypto services that make it easy for Nigerians to use their platforms. These companies are in no particular order.
Coined from Binary and Finance, Binance is the World’s largest crypto exchange company in terms of liquidity and Market Capitalization. It stands out of its rival because it charges zero fees for posting offers or transacting P2P. It also has very cheap gas fees compared to its rivals. A gas fee is defined as the fee required to successfully conducting a transaction on the Ethereum blockchain.
It is a very safe platform, which ensures that p2p transactions are successfully done. It is widely used for Nigerians on a daily basis, because it contains lots of coins, giving you lots of options to buy. It also has a LITE version to make it easy for users to navigate through.
It competes with Binance has the most frequently used p2p exchange in Nigeria. It has a customer base of over 2 million and used in more than 30 countries. Remitano has also recorded lots of successful p2p transaction with its strict escrow feature. Unlike Binance, Remitano charges users 1% transaction fee for services.
This is a Peer to Peer Bitcoin marketplace where buyers and sellers connecting together. However, Paxful supports only Bitcoin and has these fees; Paxful charges users who sell Bitcoin some percentage for its services.
You will get your payment transfers into your account instantly within 1-2 minutes after BUY/SELL bitcoin on Paxful. Paxful has a rating system for users where you can easily find the most legitimate users in order to deal with them for buying and selling bitcoins directly.
On its P2P platform, Nigerian users can buy BTC, ETH, and USDT for NGN via the bank Transfer payment option. As in Binance P2P, no fee is charged by the platform for using its P2P feature. You only buy at the price fixed by the seller you chose.
It allows its users to post advertisements, stating the exchange rate and payment methods for buying and selling Bitcoin, the only Cryptocurrency it supports. To make these adverts, you need to have up to 0.04BTC or more in your wallet.
Other crypto exchanges include Localcoinswap, Bisq, Coincola, CryptoLocally, Coindirect, BuyCoins, InstaShift, etc.
Pros and Cons of Peer-to-Peer(P2P) Exchanges
The following are the advantages of using P2P exchanges:
- Transparency: One advantage of p2p, prices are determined & listed for all to see, by supply and demand. Information about sellers including history of sales, ratings are shown for buyers to make their choices.
- Security: There is no third party handling your funds. This is because of the escrow service.
- Convenience: Trades can be carried out at all times, seamlessly and easily.
- Cost-effective: There is no middle man to settle. Though users have to pay charges to the exchange which is not much.
- Privacy: Not much personal information of the buyer is divulged during this process.
- Refunds are difficult if not non-existent: When you mistakenly confirm a transaction, there is no way a refund can be effected except the exchange acting as escrow steps in.
- Freezing of account: If payment is sent with a crypto narrative, you stand the chance of having your account frozen by the banks because of the recent ban.