• Nigerians are paying a premium for Bitcoin, but probably more for the stability of the U.S. dollar than for crypto itself.
• The high premiums were attributed to cash withdrawal limits imposed by the Nigerian government on its citizens as it swapped old bank notes for new ones.
• Nigeria’s bitcoin premiums typically reflect discrepancies between official and unofficial U.S. dollar exchange rates in the country.
Bitcoin Premiums in Nigeria
Nigerians are paying a premium, but probably more for the stability of the U.S. dollar than for bitcoin, an analyst told CoinDesk. It all started when a number of media outlets drew attention to the high premiums, which they attributed to cash withdrawal limits placed by the Nigerian government on its citizens as it worked on swapping old bank notes for new ones. But if bitcoin demand went up as a result of the cash jam in the country, the premiums should have spiked as the ATM limits were imposed in early December – yet there was no substantial increase seen at that time.
US Dollar Exchange Rates
Nigeria’s bitcoin premiums are not a new phenomenon and they typically reveal the discrepancies between official and unofficial U.S. dollar exchange rates in the country. Although the government sets an official rate, due to chronic currency devaluation problems, locals can get much higher prices on unofficial local forex markets and this is likely contributing to Nigeria’s inflated Bitcoin prices compared to global averages..
Bitcoin Demand Not Driving Premiums
As such, it seems that while Bitcoin may be gaining traction in Nigeria – with some saying it could become Africa’s biggest crypto market – Nigerians‘ demand for Bitcoin is unlikely driving these high premiums we are seeing today; rather it is simply reflecting their desire for stability offered by US Dollars over their own local currency..
In conclusion then, these inflated Bitcoin prices suggest that Nigerians are still opting to pay more money just to ensure access to US dollars over their own vulnerable naira currency – rather than viewing cryptocurrency as an attractive alternative investment option within their economy at this time..