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COVID-19: Is Crypto a Safe Haven for Nigerians who Cannot Access Forex?

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With the continued losses across economies worldwide, and the inability of Nigerians to quickly access forex, does crypto presents an opportunity for entrepreneurs to trade or for others protect their network amid the growing depreciation of the naira? 

As the news of Coronavirus came out and became a global threat to world health and economies, the financial market has been experiencing significant pressure. Globally economies are seeing several services shut down and this is having grave impact on productivity. 

The impact which started with the lockdown of cities in China accommodating millions of people has now spread across the world. 

In Italy, the effect of coronavirus is increasing becoming worrisome and this is just two nations. The most populous black nation on the planet, Nigeria has reported two official cases. 

This virus paints a picture that is as dirty as dirt. At the rate of spread, Nigerians or Africans should be worried if it moves at such rate in the continent. 

As much as the virus has affected economies globally, the Nigerian economy may be headed for a dangerous low. 

The Nigerian economy generates the majority of its revenue from the sale of crude oil. And this presents a significant marker for calculating annual budget. For years the Nigerian State has had to leave other important means of acquiring forex by solely relying on the export of crude oil. 

Since the spread of coronavirus dubbed COVID-19 has now affected the oil market, with the price of oil dropping to a dangerous low and even when compared with the price used in preparing the budget coupled with level of corruption and mismanagement, the fundamentals driving the value of the naira grows weaker by the hour. 

At the current price of Crude oil per barrel, the Nigerian State is already in a tight position. Currently, NGN to the dollar is trading on Binance at over 400NGN/$1. Other platforms are equally doing business at such a range. 

The perception of naira as a stable fiat currency is failing owing to the value drivers. One of the solutions to this issue is devaluation of the naira. However, but then this opens the country to even worse fate. The question that comes to the mind of everyday Nigerians would be “Can I trust the naira to hold my wealth? 

For those who are knowledgeable of the financial market may want to consider holding their wealth in gold. This no doubt is a smart move but then for those who cannot easily acquire gold, may decide to hold in foreign currencies like the USD.

But then, the dollar is also having its hard time in terms of acquisition in Nigeria. With the stringent position of CBN on Forex, there are two options left for people to protect their wealth. Land and Crypto. While the former is a worthy option but the ease of acquisition and disposal is an issue which may deprive people from taking this route. The latter offers a much more safe, portable, marketable and less risky alternative to the former. 

With the use of a debit or credit card or by paying a visit to a Crypto OTC Desk, Crypto of choice can easily be purchased. However, for Nigerians who do not wish to be bothered by the volatility of the crypto market may decide to opt for the purchase of stablecoins. 

Cryptocurrency, especially stablecoins presents a better opportunity for Nigerians to protect their wealth from unnecessary pressure that the global financial system crash may have on the naira. 

The current position of Nigeria is worrisome and no doubt some Nigerians are putting their wealth in safe havens. The question is where and how and should you?