How Countries Like Nigeria Use Bitcoin For International Trade

It is very difficult to switch to other currencies when your currency is not widely traded and bitcoin is accepted as currency in every country in the world.

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Bitcoin. Photo by Harrison Kugler on Unsplash

Global trade is more important than ever as so many economies are intertwined. A business in Nigeria is going to be highly dependent on goods and products from other countries, for instance. One of the biggest hurdles for emerging economies like many in Africa, is that the currency is not very attractive to trade.

Which leads to a lot of complications when it comes to buying from an overseas partner. Usually it involves more bureaucracy and a middleman. Or even multiple middlemen. This gets expensive as well as inconvenient.

The good news is that there is another option in Bitcoin to help to overcome many problems in these economies. In this article, I will go over how Bitcoin can help in trade when you live in a country like Nigeria.

Foreign exchange problems

Liquidity is not just an issue for businesses, it is also an issue for a country like Nigeria in that the central bank of Nigeria has limited liquidity to be able to help a lot of businesses. There is also a growing problem with banking fraud in Nigeria that slows growth down.

And with so much of Nigeria’s economy dependent on imports from food products to construction equipment, it can put a damper on growing a small business into something larger.

What ends up happening is that they have to try to buy up some US dollars and use that. This is a problem in a lot of ways, not least of which is limited availability of hard currency US dollars. Then there is the expense of doing this. It is far simpler a process to convert bitcoin to Naira or vice versa so it can be used to purchase goods from abroad.

It is very difficult to switch to other currencies when your currency is not widely traded and bitcoin is accepted as currency in every country in the world.

Faster and cheaper

Think about how long it would take to make some deals when you have a currency like Naira. You have to find a bank or currency trader that has the amount of dollars that you need to buy a shipment from a country like China. Then, you have to buy the dollars and pay a fee to the middleman for the privilege.

It doesn’t end there, however. Now you must make the payment to your broker for the goods in China and likely pay another fee for exchanging the dollars for renminbi. This slows the process down and costs more money that takes away from your profit margins.

With Bitcoin, there are very low processing fees and since there is no third party needed like a bank for a transfer, the process is very fast. It takes a fraction of the time to make a payment or receive a payment than when using fiat currency.

This helps get your product to market much faster and helps keep more of your money in your pocket rather than giving a big percentage to the bank.

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