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Every day it seems that more Bitcoin scams come to light. In this article Owenize Odia, Country Lead for Luno provides information on how Nigerians can identify bitcoin scams.
1. Factors driving Bitcoin growth in Nigeria
There are two main reasons people invest in Digital Currencies like Bitcoin: first, it is used as a means of payment, and secondly, it is used as an alternative asset class.
Nigerians often have trouble using their credit cards at foreign online merchants. Due to a high fraud rate, most online shops outside Nigeria won’t even attempt to process a payment from a Nigerian card. Bitcoin is an attractive option since Bitcoin payments aren’t prone to costly chargebacks (for businesses) and it can’t be “blocked” based on the origin of the transaction.
The majority of Nigerians (as in our other markets) buy Bitcoin to use it as a store of value, an alternative asset class. Since Bitcoin is limited in supply and has a market value (in almost every country around the world), many people call it “digital gold”. It has aspects of gold (and aspects of money), but it’s just easier to buy, sell and store. Many emerging market currencies have been struggling against the US Dollar in recent years, so we’re seeing more investors placing a small amount of their investment portfolio into digital currencies, to hedge against depreciation.