Early in February 2021, the CBN announced that it had banned banks from processing cryptocurrency-related transactions. It had also asked them to shut down accounts belonging to individuals and organizations engaged in trading cryptos.
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In the wake of this, Nigerians have sought ways to carry on with trading digital currencies without violating these restrictions. Thus far, the most widely favoured route to achieving this has been Peer-to-Peer (P2P) crypto exchanges.
In this article, we’ll explain what P2P cryptocurrency exchanges are, and how they work. Then we’ll go over what we believe to be the best of these platforms for Nigerians.
What Is A P2P Cryptocurrency Exchange?
A Peer-to-Peer cryptocurrency exchange is a crypto trading platform, in which buyers and sellers carry out transactions directly with each other. There is no third party mediating the trade.
This model differs from ‘traditional’ cryptocurrency exchanges, where the platform itself buys from or sells to individuals at predetermined rates.
In the traditional model, crypto traders may have to link their bank accounts to the platform so that they can fund their trading activities. This isn’t necessary for P2P exchanges; here, they can choose whatever payment mode suits the parties involved—including transfers from one bank account to the other.
Because these direct transfers happen between individuals, they aren’t automatically marked as coming from a cryptocurrency trading platform. So they avoid breaking the CBN’s rules.
Top P2P Cryptocurrency Exchanges For Nigerians
These are some of the top P2P cryptocurrency exchanges for Nigerians.
Founded in 2015, Paxful is the most widely used P2P crypto exchange in Africa. It’s based in the United States and serves a global customer base. This platform has over 5 million users and supports 300 modes of payment including bank transfer and mobile money.
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Trading fees apply, and they vary depending on the payment method the user chooses. For instance, there’s a 0.5% charge on bank transfers, a 1% fee on online transfers, and a 5% charge on iTunes and Google Play gift cards.
A downside for Paxful is that it only supports Bitcoin trades.
Remitano is one of the most popular exchanges among Nigerian crypto enthusiasts. It was set up in 2016 by Babylon Solutions and is based in Seychelles. The platform serves users in over 40 countries. Its global reach allows it to also function as a channel for international money transfers.
Unlike Paxful, Remitano supports the trade of multiple cryptocurrencies: Bitcoin (BTC), Bitcoin Cash (BCH), Ethereum (ETH), Ripple (XRP), Litecoin (LTC), Binance Coin (BNB), and Tether (USDT). It charges a 1% fee on each trade.
The Remitano platform takes a number of steps to prevent fraud, including enforcing KYC and holding sellers’ cryptos in an escrow until the trading parties confirm making and receiving payment for them.
This platform is a segment of the broader, older Binance crypto exchange, which is the biggest of its kind in the world in terms of trading volumes. More Nigerians have flocked to Binance P2P in recent times, thanks to its efforts to accommodate naira trades.
It supports trading in six cryptocurrencies, including Bitcoins, Ethereum, Binance Coin, Coinbase USD Coin, and Tether USD. Thanks to its escrow service and KYC rules, it is able to check fraudulent trades.
After the CBN’s ban on banks processing crypto-related transactions, Binance P2P introduced the FIAT/NGN pair, which allows Nigerians to trade their naira balances on the platform, and sidestep the apex bank’s restrictions.
LocalBitcoins was the first exchange to facilitate Peer-to-Peer cryptocurrency trades. As more players emerged on this scene, it has become less able to compete with alternatives.
But it’s still favoured by many users because it appears to be among the safest exchanges available. This perception comes from its strict KYC verification process, which prevents many would-be fraudsters from registering on it.
Every trade attracts a 1% fee.
There are at least two possible downsides to LocalBitcoins. First, it only allows the Bitcoin trade. It also accommodates a limited number of payment methods.
CryptoLocally is a non-custodial P2P crypto exchange. This means that users don’t have to keep their cryptos on the platform to trade. This exchange was established in 2019 as EOSLocally; it changed its name to CryptoLocally the following year.
It supports trading in EOS, Ethereum, Binance Coin, Tether USD, USD Coin, and Dai. Users can choose from about 40 payment methods. A fee of 0.99% applies to every successful transaction.
Note that CryptoLocally doesn’t have a KYC verification process. While this may make it more vulnerable to fraud, it has an escrow system that could prevent fraudulent transactions from happening.
There are numerous cryptocurrency exchanges you can choose from. The ones we have listed are among the most widely used, so there’s little question about their legitimacy. If you’re interested in becoming a P2P cryptocurrency trader, you can explore the options provided here. This is safer than transacting with lone agents outside of a regulated platform.
Featured Image Source: Financial Times
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