If you are reading this, chances are you have heard a thing or two about stablecoins. Maybe a friend mentioned them in a group chat, or you came across them while trying to figure out a better way to save money. Whatever piqued your interest in searching out this topic, you are not alone.
Many Nigerians are searching for financial tools that are stable, secure, and actually make life easier. That is where stablecoins come in. In this article, I am going to discuss how stablecoins work and the powerful role they play in Nigeria’s economy. So, let’s dive in!
KEY TAKEAWAYS:
- A stablecoin is a type of cryptocurrency that is usually pegged to the value of real-world currencies like the US dollar, euro, or even gold.
- Stablecoins matter in Nigeria because they can function as a hedge against inflation, they give Nigerians better access to global markets, and offer lower remittance costs.
- To use stablecoins, choose the right wallet, buy from a trusted platform, and watch out for scams.
- Stablecoins offer a path for Nigerians to save, send money, and build a better future for themselves and their families.
What Exactly Is a Stablecoin?
A stablecoin is a type of cryptocurrency. But unlike Bitcoin or other altcoins, which are known for their price swings, stablecoins are designed to be… well, stable. They are usually pegged to the value of real-world currency like the US dollar, euro, or even gold.
For example, one of the most popular stablecoins is USDT (Tether). One USDT is always worth roughly $1. Now, you might ask: Why not just use dollars directly?
Well, in Nigeria, accessing actual US dollars is not always easy. The official exchange rate is often quite high. Banks limit how much forex you can access, and sending or receiving international payments typically requires numerous processes. Stablecoins give you access to the power of the dollar (or any stable asset) without all those limitations.
Why Stablecoins Matter in Nigeria
Stablecoins are becoming a big deal in Nigeria. According to Chainalysis, Nigeria is one of the top countries in the world for crypto adoption, and stablecoins play a major part in that. Here are the reasons they have proven to be so useful here.
- A Hedge Against Inflation
Prices of things like food, transportation, and school fees keep going up in Nigeria. If you earn in naira and save in naira, you are stuck watching your money depreciate month after month. Stablecoins, especially dollar-backed ones, help Nigerians protect their savings.
Instead of saving your money in a local bank and losing its value over time, you can convert part of it to USDT or USDC. That way, your money holds its value, even when the naira crashes.
- Better Access to Global Markets
If you’re a freelancer, digital entrepreneur, or small business owner, you know how hard it can be to get paid by international clients. PayPal is sometimes not fully supported. Bank transfers can be expensive and slow. Luckily, stablecoins have made things change. You can now receive payments from anywhere in the world with stablecoins, quickly and at a much lower cost.
Read Also – Factors Impacting Cryptocurrencies’ Adoption In Nigeria
- Lower Remittance Costs
Millions of Nigerians have family members abroad sending money home. But traditional remittance services charge high fees and sometimes take days to deliver the funds. With stablecoins, remittances can be faster, while costing just a few dollars.
- Dollar Savings Without a Domiciliary Account
Many people want to save in dollars but do not want to deal with the stress of opening a domiciliary account. With stablecoins, you just need a crypto wallet. That means no paperwork or going to the bank.
How to Use Stablecoins in Nigeria
If you are thinking of giving stablecoins a try, that is great. But you will have to be careful about it. Here is what you need to know to use them safely and wisely.
- Choose the Right Wallet
There are two main types of crypto wallets: hot wallets and cold wallets. Hot wallets like Trust Wallet and MetaMask are easy to use, but are connected to the internet. On the other hand, cold wallets such as Ledger or Trezor are safer for large savings, but can be expensive and harder for beginners.
Read Also – Hot And Cold Wallets Explained
- Know Where to Buy and Sell
In Nigeria, people usually buy stablecoins through peer-to-peer (P2P) platforms on Binance or KuCoin and crypto exchanges like Bundle or Yellow Card. You can also get from crypto merchants. However, ensure to only use trusted ones. Also, never share your wallet seed phrase with anyone.
- Watch Out for Scams
Sadly, crypto scams are popular in Nigeria because the industry is booming. Stablecoins are meant for financial stability, not quick riches. So, you should never send money to someone who is promising you double returns.
Conclusion
If you’ve made it this far, thank you for reading. More importantly, thank you for caring about your financial future. Truly, the Nigerian economy has its challenges, and it is easy to feel like you don’t have many options. Thankfully, stablecoins offer a path for you to save, send money, and build a better future for yourself and your family.
However, although stablecoins are more predictable than other cryptocurrencies, they’re not completely risk-free. That is why it is important to learn, ask questions, and never invest more than you can afford to lose.
References
- medium.com – Stablecoin Adoption in Nigeria — A Deep Dive
- coinmarketcap.com – The Role of Stablecoins in Africa’s Near-Term Economic Boom (Part-1)
- coindesk.com – Nigerians Turn to Stablecoins for Protection Against Inflation
