P2P protected crypto exchanges from the CBN, but trust remains a major issue
P2P protected crypto exchanges from the CBN, but trust remains a major issue
A decade ago, there were fewer and less popular cryptocurrency exchanges in Nigeria. In 2011, Bitcoin was only two years old, and Ethereum was introduced four years later.
Between then and now, blockchain has grown in popularity as more people discover applications in business, finance, healthcare, and other industries. Cryptocurrencies, particularly in finance, are viewed as a means of preserving money and earning higher returns on it in ways that the traditional banking system cannot.
In 2019, Eri Noji, a computer scientist at the University of Port Harcourt, seized the opportunity presented by blockchain technology to establish an exchange where people could save money in crypto and also buy and sell digital currencies. Bigeria was created to serve as that platform.
The exchange enables users to trade up to five different coins, including Bitcoin, Nano, USDC, Ethereum, and Link. Leaving cryptocurrencies in a Bigeria wallet for an extended period of time earns up to 3% monthly interest and the option to receive interest in cryptocurrency every six hours.
Since its inception, it has grown to over 10,000 users and 100+ agents in the peer to peer model on which it is based. It recently raised the equivalent of $200,000 in on-chain tokens and is expanding its operations to support 20 additional coins in addition to the five it currently supports.
As it continues to expand, financial regulators continue to be a significant factor. To avoid unpleasant surprises, Noji says Bigeria has tailored its operations to comply with fintech regulators' requirements.
Trust continues to be the primary issue with the P2P model in Nigeria
Following the CBN's prohibition on banks and cryptocurrency startups collaborating, Bigeria and other startups have emphasized the Peer to Peer model. However, “this is highly dependent on trust, which continues to be a challenge due to the fact that there are many intelligent Nigerians willing to pull a fast one on unsuspecting traders,” according to Noji.
When money is required, it must be converted from crypto to fiat, as the average trader and the majority of sophisticated businesses do not accept cryptocurrency. This is where a peer-to-peer (P2P) agent comes into play.
In each case, someone must pay first. It is ether the person wish to convert the cryptocurrency or the person wish to purchase it in fiat or another coin. The agent acts as an escrow agent for both parties, receiving crypto from one, verifying it with the other, and authorizing the seller to receive fiat money. After the seller confirms receipt of payment, the seller transfers the crypto to the buyer and the transaction is complete.
This peer-to-peer process is frequently more complicated than it appears. Even if P2P agents are verified, they may steal money or crypto and leave the transacting parties stranded. Startups are responsible for preventing such fraud.
Apart from trust, another issue is that the P2P model requires more time due to the back and forth required to protect the parties involved in the transaction.
Regardless of the challenges associated with the P2P model, there is no doubt that it works. To minimize the time spent on each transaction, Bigeria utilizes agents and a variety of communication platforms, including email and WhatsApp. As the startup grows, the model will be refurbished until it is completely bulletproof.
Courses and Certification
Cryptocurrency Course and Certificate
