Earlier this week, Bitcoin Africa had the chance to interview NairaEx CEO David Ajala to learn more about the story behind NairaEx, how he came across bitcoin and the rise of bitcoin in Nigeria.
NairaEx is one of the most popular bitcoin exchanges in Nigeria, which puts Ajala in a great position to witness the exponential growth of bitcoin in the West African country.
“I came across bitcoin in 2013 while looking for alternative remittance mediums. Sending remittances to friends and family abroad had cost me a significant amount of money and time when relying on banks and Western Union-like services. Looking back, in 2013 bitcoin was significantly smaller with a small user base and significantly lower value, but the speed and cost of transactions were unbelievable, incomparable to any other service I had used previously. Being on a global scale, I also had no restrictions on where to send my money to,” Ajala stated.
What inspired you to launch the bitcoin exchange Nairaex?
Launching the bitcoin exchange primarily came from the restrictions faced by Nigerians looking to send money abroad. Relying on traditional systems such as banks and Western Union, Nigerians often end up paying some of the highest fees in the world.
Coupled with the volatile Naira, sending money abroad using banks simply doesn’t give assurances your money will still have value after fees and Naira exchange rates are calculated. This is where bitcoin came to be a perfect solution as prices are considered stable and fees significantly lower on our exchange.
What’s your opinion on the future of bitcoin and the blockchain in Nigeria and Africa in general?
The future of bitcoin seems bright compared to the past. Currently, markets are considered favourably for traders with daily price swings many can profit from. For companies and private users, bitcoin remains more reliable than the naira with a single exchange rate, parallel markets don’t affect bitcoin prices like they do to the naira.
However, scaling will become a bigger issue as the number of bitcoin users increases to almost 6 million (according to the Cambridge University), transactions are getting slightly slower, taking on average 10 minutes but are still significantly faster than Western Union, which often takes days.
Considering the cost of remittances in Africa in general, bitcoin will prosper well into the future as transactions remain cheaper and faster, although a scaling solution needs to be found.
How fast is Nairaex.com growing? Can you tell us how many users NairaEx has?
In line with the huge interest in bitcoin markets, NairaEx too has grown relatively fast. Having accumulated over 100,000 customers last year, bitcoin use has grown exponentially around the country as many of our customers see the value of crypto compared to the traditional naira.
Furthermore, having successfully completed over 170,000 orders since launch, the exchange has become one of the most trusted names in the country. Currently, NairaEx processes over 1 billion naira worth of transactions every month.
What challenges do you face running NairaEx?
As with any bitcoin exchange, many of the risks we encounter relate to the origins of funds being used on the exchange. While the majority of funds transferred by clients are clean and transactions hassle-free, a minority remain complicated as funds could be stolen, obtained via fraud or are outright illegal in some cases.
The risk does remain large as often it only takes one rogue transaction to cause months of legal and financial complications. Luckily, we are continuously working to improve our fraud prevention mechanisms to ensure all transactions remain legal and safe.
What is next for NairaEx?
The future for NairaEx is likely to involve an expansion in services to accommodate a range of consumers.
Currently, our service is exchange and remittance centered, but as bitcoin use and adoption increases, we hope to provide merchant and corporate services to complement our current offering. As our blockchain service matures, we may also launch Bitcoin investment funds to allow consumers to profit off the extremely volatile crypto markets.