Digital currency advocates are breaking new grounds in Nigeria as South African bitcoin exchange ICE3X launches Nigeria’s First Bitcoin Exchange, opening up a potentially huge market for bitcoin in Africa’s most populous country.
Nigeria, with a massive population of over 177 million people, 33.6 million of whom are in the 18–35 age bracket has been described as a “virgin territory” for the bitcoin market by ICE3X founder, Gareth Grobler, while speaking to CoinDesk, a world leader in news, prices and information on bitcoin and other digital currencies.
The South African company has formed an exclusive partnership with VoguePay, a payment processor in Nigeria, allowing users to buy and sell bitcoins using the local currency, the naira, directly from existing VoguePay wallets.
“The market, however, is potentially massive. VoguePay have spotted the opportunity bitcoin offers, seeing as one of the primary attributes of bitcoin is its security. Nigerian online consumers simply do not have the same access to goods and services from international vendors due to one simple thing – credit card fraud. Bitcoin solves that problem,” Grobler added.
ICE3X which already operates in South Africa is also planning to roll out merchant services in Nigeria, allowing local businesses to accept bitcoin.
A Bitcoin Thought Leaders survey revealed that international remittances are viewed as one of the most compelling bitcoin use cases for 2015. When factoring in average remittance fees, the revised Bitcoin Market Potential Index reveals that Sub-Saharan Africa (SSA) and Nigeria in particular, is a very fertile region for bitcoin adoption
A remittance inflow of $21 billion into Nigeria was predicted by the World Bank Group for the year 2014 in a recent report, placing Nigeria as the top recipient of foreign remittance in Africa.
A bitcoin is the best-known virtual currency and started circulating in 2009 – currently worth $276.80. Unlike conventional money, bitcoin is generated by computers and is independent of control or backing by any government.
Recent reports by the Nigerian Communications Commission (NCC) revealed that in September 2014, the country had over 73.8 million active Internet subscriptions, yet ICE3X says this space has been largely ignored by the digital currency advocates.
“The market… is potentially massive. VoguePay have spotted the opportunity bitcoin offers, seeing as one of the primary attributes of bitcoin is its security. Nigerian online consumers simply do not have the same access to goods and services from international vendors due to one simple thing – credit card fraud. Bitcoin solves that problem… The idea is that, for example, a farmer in Nigeria can buy a tractor from a supplier in the USA, and both parties could benefit from the near instant, secure and transparent funding solutions underpinned by the bitcoin technology,” Grobler said.
Between year 2000 and 2013, Nigerian banks have lost an estimated N159 billion to electronic frauds (credit card fraud) according to reports by the Nigerian Inter-bank Settlements Systems (NIBSS).
Security remains a key concern in bitcoin development. Companies across the ecosystem are collaborating on security to improve customers’ confidence. For example, more than 5% of bitcoins are now secured with multisig technology.
“We have to be realistic… Bitcoin technology has yet to be packaged and applied correctly for it to be a mainstream alternative currency, but as an agnostic payment settlement mechanism within a larger framework it ticks all the boxes and could perhaps have a significant impact on shaping the Nigerian digital economy landscape,” Grobler added.
In the fourth quarter of 2014, Microsoft became the largest retailer by far to begin accepting bitcoin for payment for Xbox games and mobile content. Dell and Expedia are amongst global brands that have begun accepting bitcoins.
CoinDesk is forecasting that the number of merchants accepting bitcoin will grow to over 140,000 at the end of 2015.
There were 1.4 million new bitcoin wallets created in Q4, representing 21% growth quarter-over-quarter. CoinDesk is forecasting 12 million total bitcoin wallets by the end of 2015.