Nigeria

African blockchain ventures outpace global funding growth: Report

Africa witnessed a 429% YoY increase in venture funding in 2022, with the majority of funding coming from Seychelles and South Africa.

The African continent continues to be a fertile ground for the growth and implementation of blockchain technology.

According to the 2022 “African Blockchain Report” by CV VC, blockchain deals in Africa raised a total of $474 million in 2022, representing a 429% increase from the $90 million raised in 2021. This growth in funding far surpassed the global average, which only saw a 4% increase in blockchain funding.

According to the report, African blockchain funding demonstrated a growth rate that was over 12.5x higher than that of general African venture funding on a year-on-year basis. Overall African venture funding saw just a 34% increase, with $3.14 billion raised across 570 deals.

Africa experienced the highest growth rate in funding globally, while the United States remained steady at $15.2 billion in funding and Asia and Europe saw YoY increases of 50% and 35% with $4.74 billion and $4.88 billion in funding, respectively.

African blockchain venture funding by countries. Source: CV VC

Last year, Seychelles and South Africa were responsible for 81% of the blockchain venture funding in Africa, having raised $208 million and $177 million, respectively. Moreover, the total number of African blockchain deals increased by 12% YoY, from 26 to 29.

African blockchain venture funding made up 1.77% of global blockchain venture funding, which saw an impressive 407% YoY increase, with several countries contributing to the surge. By comparison, the U.S. concluded 137 deals while Asia and Europe had 84 and 78, respectively.

Related: Web3 economy to gain more traction in Africa through DeFi-based financial inclusion

Nigeria was the frontrunner when it comes to the number of blockchain startups receiving funding, followed by South Africa, Seychelles and Kenya. However, despite Nigeria having the highest number of deals on the continent in 2022, it only accounted for 3.4% of all African blockchain venture funding, with an average deal size of $1.25 million.

Taking into account the substantial increase in blockchain funding in Africa and the fact that there was a relatively small increase in the number of blockchain deals shows that the median deal size has significantly risen. This suggests that businesses are securing more substantial funding and investors are becoming more confident in African blockchain ventures.

Magazine: Bitcoin in Senegal: Why is this African country using BTC?

Nigerian crypto payment startup shuts down, offers IP for sale

Nigerian crypto and Web3 company Lazerpay shuts down after failing to raise funds and advises users to withdraw before April 30.

Nigerian crypto and Web3 company Lazerpay announced on April 13 that it is shutting down its operations.

According to a statement released on Twitter by Lazerpay founder and CEO Emmanuel Njoku, the decision to shut down the startup was necessary after the company could not raise funds in a funding round.

In the statement, Njoku said, “We are immensely grateful for the connection we have made and the impact our platform has made in the crypto ecosystem. We fought hard to keep the lights on for as long as possible, but unfortunately, we are now at the point where we need to shut down.”

The shutdown comes just months after announcing layoffs in November 2022. The company’s layoffs were due to its inability to raise funds after a lead investor pulled out.

The startup has announced its renewed focus on ensuring a seamless transition for its users by resolving any outstanding issues. To this end, it has been recommended that merchants use the bank or crypto payout options and withdraw their funds from the platform before April 30, 2023. Additionally, the startup is now inviting companies to make offers to purchase its intellectual property.

Njoku launched Lazerpay as a teenager and co-founded the company with Abdulfatai Suleiman and Prosper Ubi in October 2021 to drive crypto adoption globally. The company helps businesses accept stablecoin payments from customers globally.

According to Njoku, Lazerpay has onboarded over 3,000 businesses, processing over $1 million in transactions.

Related: Nigerian crypto foreign investment is at a record low: Study

The African crypto space has recently been hit with a wave of upheaval. Just last week, Bitcoin (BTC) peer-to-peer marketplace, Paxful, announced that it would cease operations.

However, certain crypto payment startups in the continent are still thriving. For example, NairaEx is an active Bitcoin exchange in Nigeria serving as a medium for Nigerian traders to purchase or sell the country’s fiat currency, nairas, for cryptocurrency.

Magazine: Bitcoin in Senegal: Why is this African country using BTC?

Bitcoin gaming enters Africa with local crypto exchange partnership

The Bitcoin gaming economy gets a boost from Zebedee’s expansion into Africa, complementing its Brazil and Philippines operations.

Gamers in Africa can now send and receive small amounts of Bitcoin (BTC) while playing classic titles like Counter-Strike.

Zebedee, a fintech and payments processor targeting the gaming space, has partnered with crypto exchange platform Bitnob to offer payments and gaming reward options in Africa using the Bitcoin Lightning Network (LN).

Within the partnership, African users can earn Bitcoin through Zebedee-powered apps and games. Zebedee’s offering serves as a second layer in games that allows developers to replace vague in-game points rewards with satoshis, the smallest denomination of Bitcoin. Through the partnership with Bitnob, these, in turn, can be converted to a local currency like the Nigerian nairas.

Related: Polygon becomes second-largest gaming blockchain after user activity surges in March

Zebedee’s chief strategy officer Ben Cousens explained that the partnership was driven by game developers who had Bitcoin in mind for tournaments and other gaming rewards.

“If I’m Activision Blizzard or EA Games and I have 30 million players of my games in Africa, and I run tournaments or giveaways, I cannot pay those players on fiat rails — it is too expensive. I am limited to the U.S., and I lose money from loss of engagement. Try sending $0.01 to these territories on another rail,” he said.

“This is about the $180 billion video games market, not play-and-earn or crypto gaming.”

In general, Africa has been a growing area of interest for the Lightning Network, partly due to the LN’s ability to facilitate microtransactions. Bitcoin Senegal founder Nourou told Cointelegraph, “Microtransactions are our economic reality,” hence why he and many other African builders and developers are exploring the LN. 

Gamers can already earn Bitcoin by playing popular games such as Counter-Strike. Source: Zebedee

Africa benefits from young demographics and a digitally native population. Cousens continued, “We’ve seen consistent evidence of high demand for our platform across the African continent, where the purchasing power of Bitcoin is considerably higher than markets like the U.S. and Europe.”

Indeed, the matchup of LN and gaming is a growing trend during the bear market. Cousens said it’s “A natural evolution of the interactive entertainment landscape, where ‘Rewarded Play’ (in lieu of unsustainable play-and-earn) provides meaningful performance uplift for game developers against a backdrop of slowing growth in mobile gaming revenue while engaging players in a fun and creative way.”

Magazine: ZK-rollups are ‘the endgame’ for scaling blockchains: Polygon Miden founder

Nigerian crypto foreign investment is at a record low: Study

Foreign direct investment in Nigeria fell by 33% last year due to a severe shortage of dollars, which discouraged crypto companies from expanding into the country.

The largest economy in Africa has a foreign investment problem despite exponential growth in crypto adoption.

The National Bureau of Statistics (NBS) reported on Tuesday that foreign direct investment (FDI) in Nigeria, the largest economy in Africa, dropped by 33% last year due to a severe shortage of dollars. The shortage has also discouraged crypto companies from expanding into the country. In 2022, investment declined to $468 million from the previous year’s $698 million. According to the data, FDI has decreased by approximately 90% since its peak of $4.7 billion in 2008.

The adoption of crypto in Nigeria has grown at an exponential rate. The country has active adult crypto traders, with many citizens now preferring to store their money in digital currencies over fiat cash due to the constant devaluation of the national currency, the naira. In Chainalysis’ 2020 Cryptocurrency Geography Report, Nigeria ranked eighth in crypto adoption and usage rate among 154 countries included in the study. This adoption rate is expected to have encouraged more foreign crypto investment in the nation but the reverse is the case.

Foreign direct investment into Nigeria plunges. Source: Bloomberg

In an interview with Cointelegraph, local data analyst and crypto enthusiast, Obinna Uzoije, said the low rate of foreign investment in Nigeria could be attributed to the fact that the use of cryptocurrency was yet to go mainstream in the country. Uzoije explained that the lack of use of crypto in day-to-day economic activities and the ban on financial institutions from servicing crypto exchanges were to be blamed for the low investment rate.

As part of the 2021 ban, the Central Bank of Nigeria directed all commercial banks to close accounts belonging to crypto exchanges and other businesses transacting in cryptocurrencies in the country.

In a tweet, Olumide Adesina, a certified investment trader, reacted to the NBS report by saying that despite Nigerians “loving” crypto, fintech and entertainment, no state has taken the initiative to attract foreign investors in those areas. In another tweet, Adesina said Lagos State building a real tech and crypto community like Silicon Valley would create thousands of direct jobs.

Related: Paxful shutdown hits Nigeria harder than the rest of the world — Here’s why

Lagos State Governor, Babajide Sanwo-Olu, had earlier announced proposals for crypto adoption in the state, according to local media reports. Some of the initiatives proposed by Sanwo-Olu include establishing a dedicated sandbox regulatory framework for cryptocurrency, creating a crypto-focused innovation hub, and providing incentives for businesses that accept crypto payments.

Magazine: Best and worst countries for crypto taxes — plus crypto tax tips

Nigerian crypto investors question central bank’s decision to flag p2p users

Crypto P2P users in Nigeria worry over using various platforms to launder funds as the country’s central bank cracks down on bank accounts that receive a share of Flutterwave’s rumored stolen funds.

Nigerian crypto investors using peer-to-peer (P2P) services have expressed concerns about the Central Bank of Nigeria (CBN) flagging their bank accounts. CBN’s decision to flag accounts is believed to be in relation to the near $6.3 million (2.9 billion nairas) Flutterwave hack, as the bank accounts have yet-to-be-proven affiliations with the hack.

According to local news sources, on February 19, 2023, Albert Onimole, legal counsel for Flutterwave, a Nigerian fintech company, allegedly reported a case to the Deputy Commissioner of Police, in Yaba, Lagos, of almost $6.5 million (3 billion nairas) that had been illegally transferred from the accounts of his client.

On February 27th, a motion ex-parte was filed and granted in support of Flutterwave’s claims. According to the motion, 107 accounts, including their fifth beneficiaries, will be put on lien/Post-No-Debit (PND). So far, some of the locals have confirmed that their accounts have been frozen in connection to the hack.

The situation has gone on to discourage P2P users from interacting with the various over-the-counter (OTC) — markets that allow trading of securities between two counterparties executed outside of formal exchanges and without the supervision of an exchange regulator, as the hacked sum flowed into the Nigeria crypto market on different OTCs and users now have problems with financial intermediaries when they want to use P2P services for crypto transfe.

Investors across the world use P2P as a medium of direct exchange of crypto between parties without the involvement of a central authority. They may choose to swap cryptocurrencies for cryptocurrencies or crypto for cash. In 2021, the CBN announced a regulation that prevented financial institutions like banks from enabling crypto use. However, Nigerians were able to find a way forward and still maintain their leading position as the largest crypto hub of Africa through the use of P2P platforms.

Some community members believe this could affect the general interest of Nigerians who are yet to get on board the crypto digital ecosystem in acquiring digital assets.

A concerned Nigerian stated that the situation is causing some businesses to crumble. This is because unsuspecting entrepreneurs have received payments for their services with funds that were allegedly linked to the hacked amount, resulting in confusion and possible legal repercussions.

Related: Binance recommends P2P as Ukraine suspends hryvnia use on crypto exchanges

Despite strict crypto regulations by the CBN, the P2P market has aided Nigerian trade. However, a financial analyst known as Sadeik calls it a black market hub for scammers laundering fraud funds. Sadeik went on to say that a friend of his lost more than 500,000 because the person he transacted with had his account flagged in the Flutterwave hack.

In an official statement, Flutterwave denied the hack saying it identified an unusual trend of transactions on some users’ profiles and immediately launched a review in line with its standard operating procedure, which revealed that some users who had not activated some of our recommended security settings might have been susceptible. The statement adds that Flutterwave was able to address the issue before any harm was done to its users.

Magazine: What really goes on at a crypto OTC desk?

Nigerian crypto investors question central bank’s decision to flag P2P users

Crypto P2P users in Nigeria worry over using various platforms to transfer funds as the country’s central bank cracks down on bank accounts that received a share of Flutterwave’s rumored stolen funds.

Nigerian crypto investors using peer-to-peer (P2P) services have expressed concerns about the Central Bank of Nigeria flagging their bank accounts. CBN’s decision to flag accounts is believed to be in relation to the near $6.3 million (2.9 billion naira) Flutterwave hack, as the bank accounts have yet-to-be-proven affiliations with the hack.

According to local news sources, on Feb. 19, Albert Onimole, legal counsel for  Nigerian fintech company Flutterwave, reported to police in Yaba, Lagos, that almost $6.5 million (3 billion naira) had been illegally transferred from the accounts of his client.

On February 27th, a motion ex-parte was filed and granted in support of Flutterwave’s claims. According to the motion, 107 accounts, including their fifth beneficiaries, will be put on lien/Post-No-Debit (PND). So far, some of the locals have confirmed that their accounts have been frozen in connection to the hack.

The situation has gone on to discourage P2P users from interacting with the various over-the-counter (OTC) markets, which allow the trading of securities between two counterparties executed outside of formal exchanges and without the supervision of an exchange regulator. That’s because the hacked sum flowed into the Nigerian crypto market on different OTCs, and users now have problems with financial intermediaries when they want to use P2P services for crypto transfers.

Investors across the world use P2P as a medium of direct exchange of crypto between parties without the involvement of a central authority. They may choose to swap cryptocurrencies for cryptocurrencies or crypto for cash. In 2021, the CBN announced a regulation that prevented financial institutions like banks from enabling crypto use. However, Nigerians were able to find a way forward and still maintain their leading position as the largest crypto hub of Africa through the use of P2P platforms.

Some community members believe this could affect the general interest of Nigerians who are yet to get on board the crypto digital ecosystem in acquiring digital assets.

A concerned Nigerian stated that the situation is causing some businesses to crumble. This is because unsuspecting entrepreneurs have received payments for their services with funds that were allegedly linked to the hacked amount, resulting in confusion and possible legal repercussions.

Related: Binance recommends P2P as Ukraine suspends hryvnia use on crypto exchanges

Despite strict crypto regulations by the CBN, the P2P market has aided Nigerian trade. However, a financial analyst known as Sadeik calls it a black market hub for scammers laundering fraud funds. He went on to say that a friend of his lost more than 500,000 naira because the person he transacted with had his account flagged in the Flutterwave hack.

In an official statement, Flutterwave denied the hack, saying it identified an unusual trend of transactions on some users’ profiles and immediately launched a review in line with its standard operating procedure. The review purportedly revealed that some users who had not activated recommended security settings might have been susceptible to hacking. The statement added that Flutterwave was able to address the issue before any harm was done to its users.

Magazine: What really goes on at a crypto OTC desk?

Crypto Biz: Mastercard opens network to USDC, OKX departs Canada, Bitcoin climbs

Despite global bank turmoil and regulatory crackdowns, traditional and decentralized finance (DeFi) are continuing to blend.

Banks turmoil and regulatory crackdowns happening worldwide have not slowed down the ongoing blending of traditional and decentralized finance (DeFi). The on-ramps connecting the two sides seem even stronger despite the wild winds of change.

Take, for example, the recent issues that Circle-issued USD Coin (USDC) faced when it depegged from the U.S. dollar following Silicon Valley Bank’s collapse. Two weeks later, Mastercard boldly integrated the stablecoin into its infrastructure in the Asia-Pacific region, allowing users to spend USDC through its network. It’s happening, folks!

And let’s not forget about Bitcoin (BTC) — that digital gold is still on the rise and decoupling from Wall Street, once again proving its value proposition and prompting calls for a hedge against equity markets in the long run.

This week’s Crypto Biz documents the latest developments on worldwide crypto adoption, and how banking system fears impact the crypto space.

Mastercard to settle transactions for stablecoin wallet in APAC

Global payment provider Mastercard has made another move into the crypto space to allow retail customers in the Asia-Pacific region to spend stablecoins anywhere Mastercard is accepted. This move was made possible by a partnership with Stables, an Australian stablecoin platform. Users can spend and save USDC by converting it into fiat and settling on the Mastercard network. The wallet will accept deposits in several stablecoins, including Tether (USDT) and Binance USD (BUSD), with all deposits automatically converted into USDC.

MetaMask enables direct crypto purchases in Nigeria

On-ramps for digital assets are also increasing in Nigeria, as crypto wallet MetaMask expanded direct transactions with local banks. MetaMask’s parent firm ConsenSys has partnered with crypto fintech MoonPay, enabling users in the country to purchase crypto via instant bank transfers without requiring a credit or debit card. The integration is estimated to reduce the decline rate for direct crypto purchases in Nigeria from 90% to 30%. Nigeria is a major market for MetaMask, ranking third in mobile monthly active users. Chainalysis ranks Nigeria as one of the top 20 countries in cryptocurrency adoption.

OKX to cease operations in Canada by June 22, 2023

In a “temporary” bye-bye, crypto exchange OKX emailed Canadian users that the firm “will no longer provide services or allow users to open new accounts in Canada starting on March 24, 2023.” OKX cited “new regulations” behind the move, saying it is only temporary while it works with regulators. By June 22, OKX’s customers in the country must close open options, margins, perpetuals and futures positions. Fiat or tokens must also be withdrawn by that date. In February, The Canadian Securities Administrators published a notice requiring crypto exchanges to sign new, legally binding undertakings while they await registration with regulators. 

Off-boarding message sent to Canadian OKX users on March 20, 2023. Source: OKX

Bitcoin’s banking crisis surge will ‘attract more institutions’: ARK’s Cathie Wood

With fears of a global banking crisis on the rise, Bitcoin’s value proposition is on full display as its price continues to climb following the collapses of Silvergate, Silicon Valley Bank and Signature Bank. ARK Invest CEO Cathie Wood believes the current decoupling of BTC’s price to the equity markets may attract more institutional investors into Bitcoin over time. As for the impact on Bitcoin’s price from institutional interest, Wood expects that most firms would allocate between 2.5% to 6.5% of their investment portfolios to BTC by 2030, taking the leading cryptocurrency’s price to $1–1.5 million.

The impact of the Credit Suisse bank crisis on the crypto market

How to analyze banks and avoid inaccurate market capitalization indicators — such as the $15.8 billion value of Silicon Valley Bank? Crypto analyst Marcel Pechman delves into the enterprise value metric and how it provides a better picture of a bank’s balance sheet terms by subtracting net debt from market cap. Of course, Pechman first explains the relationship between banking valuation and cryptocurrencies, specifically Bitcoin’s ethos. 

Crypto Biz is your weekly pulse of the business behind blockchain and crypto, delivered directly to your inbox every Thursday.

How blockchain can help reimagine a new state in Africa

Eche Emole, the co-founder of Afropolitan, explains how the nation-state experiment has failed, especially in Africa, and how blockchain can be used to reimagine a new state.

On episode 12 of Cointelegraph’s Hashing It Out podcast, Eche Emole, co-founder of Afropolitan, explains what it means to build a country on the blockchain.

From an event and media company, Afropolitan has transitioned to a blockchain-based state of Africans on the continent and in the diaspora. Emole, an African in the diaspora with a political science, philosophy and law background, believes the nation-state experiment has failed in Africa. According to him, the existing state structures have stifled the development of people on the continent.

“We truly believe that the nation-state experiment has failed for Africans globally. It has yielded nothing but poverty, weakness, corruption, and it very stifling.“

The co-founder of Afropolitan explains that the inspiration to build a network state comes from an article titled “How To Start a New Country,” written by former Coinbase chief technology officer Balaji Srinivasan, who has recently been in the news for a $2 million bet on Bitcoin reaching $1 million in 90 days. Another piece of literature that inspired the creation of Afropolitan is the first of the federalist papers, published by Alexander Hamilton.

According to Emole, the plan to build Afropolitan will occur in four phases: building a community, offering governance as a service, becoming a minimum viable state and securing land for the real-life version of the state, featuring a Chinatown and an embassy.

Emole believes that another reason why Afropolitan is necessary is the lack of opportunities that exist for Africans. Emole explains that the issue is a two-part problem beginning from the point where most Africans are not in the rooms where major decisions are being made. Moreover, the lack of cross-industry communication prevents collaborations between Africans in a way that solves problems.

Related: US Bank collapse — Is crypto being targeted?

Elisha (GhCryptoGuy) and Emole also discuss the hurdles of creating a nation on the blockchain, the future of crypto in Africa and Vitalik Buterin’s visit to the continent.

Listen to Hashing It Out Episode 12 on Spotify, Apple Podcasts, Google Podcasts or TuneIn. You can also check out Cointelegraph’s full catalog of informative podcasts on the Cointelegraph Podcasts page.

Nigeria CBDC adoption spikes as fiat currency shortage grip the nation

The acute cash shortage in Nigeria was due to the central bank’s decision to replace older bank notes with bigger denominations amid rising inflation.

Nearly 18 months after launching its in-house central bank digital currency (CBDC), the eNaira, Nigeria is seeing increased adoption in the CBDC as national fiat reserves face severe shortages. 

The acute cash shortage in Nigeria was due to the central bank’s decision to replace older bank notes with bigger denominations amid rising inflation. While developing nations were among the first to acknowledge the importance of a CBDC in revamping fiat capabilities, the idea is yet to materialize.

However, the lack of physical cash forced Nigerians to use the eNaira. In a country where cash accounts for about 90% of transactions, the value of eNaira transactions increased 63% to 22 billion nairas ($47.7 million), revealed a Bloomberg report.

Moreover, according to Godwin Emefiele, governor of the Central Bank of Nigeria, the total number of CBDC wallets grew more than 12 times compared with October 2022 and is currently at 13 million.

Magazine: Unstablecoins: Depegging, bank runs and other risks loom

The demonetization reduced the circulating cash supply from 3.2 trillion nairas to 1 trillion nairas. Compensating for this decline, Nigeria minted over 10 billion eNairas. In addition, eNaira payouts in government initiatives and social schemes also contribute to the increase in CBDC’s adoption.

For developing countries, CBDCs present a way to overcome challenges presented by the fiat economy, which includes reducing operating costs and strengthening Anti-Money Laundering initiatives.

“The eNaira has emerged as the electronic payment channel of choice for financial inclusion and executing social interventions,” concluded Emefiele.

Related: eNaira is ‘crippled‘: Nigeria in talks with NY-based company for revamp

Amid the cash crunch, Nigerians have been presented with another option for procuring cryptocurrencies. MetaMask’s parent firm ConsenSys recently announced a new MoonPay integration, which allows Nigerians to purchase crypto via bank transfers.

Screenshot showing option to buy crypto using fiat. Source: ConsenSys

As shown in the above screenshot, the new feature is available within the MetaMask mobile and Portfolio DApp, significantly simplifying buying crypto without using credit or debit cards in Nigeria.

MetaMask enables direct crypto purchases in Nigeria

Crypto investors in Nigeria no longer need to rely on centralized exchanges for buying cryptocurrencies like Bitcoin.

Self-custody cryptocurrency purchases are becoming more accessible in Nigeria as major crypto wallet MetaMask expands direct on-ramps with local banks.

On March 21, MetaMask’s parent firm ConsenSys announced a new integration with crypto fintech MoonPay, enabling users in Nigeria to purchase crypto via instant bank transfers.

The new feature is available within the MetaMask mobile and Portfolio DApp, significantly simplifying the process of buying crypto without using credit or debit cards in Nigeria.

Source: ConsenSys

Before the partnership, MetaMask users in Nigeria had access to the MetaMask wallet, but the process of buying crypto was costly and time-consuming, MetaMask product manager Lorenzo Santos told Cointelegraph. He stated:

“While Moonpay had a card integration feature, about 90% of attempts to buy crypto with a credit or debit card were declined.”

With the new integration supporting local bank transfers, crypto purchases on MetaMask are now faster and cheaper, allowing users to access crypto without sending assets from a centralized exchange.

MoonPay chief product and strategy officer Zeeshan Feroz told Cointelegraph that the integration is estimated to reduce the decline rate for direct crypto purchases in Nigeria from 90% to 30%. He noted that customers of all banks in Nigeria would have access to the service through bank ransfers, which is a widely used payment method across Nigerian e-commerce businesses.

Despite the current issues with crypto on-ramps in Nigeria, the country has emerged as a major market for MetaMask, ranking third in mobile monthly active users, Santos said. “It is also among the top ten countries regarding visitors to metamask.io over the last month,” he added.

Related: Nigerian president-elect aims to use blockchain technology in the banking sector

According to the Chainalysis 2022 Global Crypto Adoption Index, Nigeria is one of the world’s top 20 ranked countries in cryptocurrency adoption. Some reports suggest that 35% of the Nigerian population aged 18 to 60 owned or traded cryptocurrencies in 2022. That is despite the Central Bank of Nigeria banning banks from servicing crypto exchanges in February 2021.

In December 2022, local media reported that the Nigerian government was preparing to pass a law recognizing the usage of Bitcoin(BTC) and other cryptocurrencies to keep up to date with “global practices.”