Decisions by regulators in Nigeria and other African countries may have spurred the rise in peer-to-peer transactions in the cryptocurrency market, a survey conducted by Binance, has shown, adding that there are three reasons users invest in crypto.
Fifty-five per cent said they own crypto as part of a long-term investment strategy, 38 per cent don’t trust the current financial system and 31 per cent see crypto as a short-term trading opportunity.
Based on this, Binance said it has seen an over 2000 per cent increase in the number of peer-to-peer (P2P) users in Africa from January to April 2021.
The Nigerian crypto market recently suffered a setback as a result of a decision by the financial regulator to prohibit banking services from providing support for cryptocurrency businesses. Following that decision, the crypto market has seen a spike as users migrated from crypto-to-fiat exchanges to peer-to-peer exchanges. A report by Luno and Arcane Research found that Nigeria contributes the most volume of P2P in Sub-Saharan Africa with as much as $8 million in weekly transactions.
According to a note from Binance, the volume of P2P transactions in Africa surged by 386.93 per cent in just four months, adding that its P2P user base in Africa grew by 2228.21 per cent within the same period.
Peer-to-peer refers to the process of buying and selling cryptocurrencies directly between users, without a third party or intermediary.
When users buy or sell cryptocurrencies using a traditional exchange, they don’t get to transact directly with the counterparty. Instead, they use charts and other market aggregators to determine the optimal time to buy, sell, or hold cryptocurrencies. The exchange organises the transaction on their behalf, and the market price determines the final price at the time of the transaction.