How to win: Investing in Bitcoin and other cryptoassets in Nigeria

How to win: Investing in Bitcoin in Nigeria banner

One way or the other, most people have heard about bitcoin in Nigeria, even if they haven't fully understood the opportunity it provides. 

If you live in Nigeria, you'll likely have heard adverts about Bitcoin and other cryptocurrencies on the radio or seen posters of a cryptocurrency exchange trying to lure you to their platform.

Some people also have friends or relatives who have tried to convince them to start investing in bitcoin.


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This article helps you understand cryptoassets in general, not just bitcoin now; the value of these cryptoassets; available investment opportunities in the ecosystem, the risks and how to mitigate them.

Also, if you're already interested in investing in this asset class, there's a section where we explain how you can buy bitcoin in Nigeria.

Learning the fundamentals

It's important to start from the fundamentals, however. Not "what is blockchain"? or "what is cryptocurrency?" kind of basics, but helping you understand the potential for bitcoin and other cryptoassets. 

Please, do understand that people often incorrectly categorise all cryptoassets as cryptocurrencies but as we'll see later in this article the word "cryptocurrency" only expresses a fraction of the innovation and opportunities available in the growing ecosystem.

We prefer the term cryptoassets. It is a word that accurately encapsulates the different characteristics and value of this new asset class.

Since cryptoassets are a new technological leap, expect to see some unfamiliar terms. Getting acquainted with these words could take some time. However, the basics you'll learn here gives you a good foundation.

Confusing media reports and risks...

With lots of confusing media reports about the value of bitcoin, is it worth getting into this space yet? Fair question.

You could even say the risks are just too high; it's easier to stay away and stick to only traditional investments for now.

You're right, the risks are high but remember all investment come with some element of risk. There's a positive correlation between the amount of risk and the potential for return. Understanding how to evaluate an asset's value and market fundamentals can help reduce some of that risk.

This article gives you a soft landing into the world of cryptoassets and bitcoin investment.

However, first, let's start with the frequently asked question:

Is bitcoin a fraud?

Bitcoin has been declared dead more than 300 times and called a fraud about the same number of times. Some media platforms have compared it to Ponzi schemes. Even the Nigerian central bank has distanced itself from cryptocurrencies.  

Hence, it's fair if you also had some doubts about this new technology.

In 2014, Kaushik Basu's research paper for the World Bank profiled the origins of Ponzi schemes (the latest one being the Mavrodi Mundial Movement (MMM), one of the world's largest Ponzi schemes).

The World Bank research squashed the ignorant assertions and classification of Bitcoin as a form of Ponzi scheme. 

“Contrary to a widely-held opinion, Bitcoin is not a deliberate Ponzi. And there is little to learn by treating it as such," the research paper said.

Moving beyond scams...

To understand Bitcoin you have to move beyond categorising Bitcoin as another MMM or a shadowy payment network used by criminals.

Christine Lagarde, the managing director of the International Monetary Fund, wrote on the Fund's website that "it would not be wise to dismiss crypto-assets; we must welcome their potential but also recognise their risks."

Ernst & Young (EY), a global accounting firm, proudly proclaimed Bitcoin the future of money in a research in 2017. (EY Switzerland became the first "big four" accounting firm to accept bitcoin for its advisory and auditing services in late 2016).  

Indeed, these global organisations would not waste their time and resources - or even put their reputation on the line - on a fraudulent asset with no growth potential.

Bitcoin and Cryptoassets: Where to start?

Let's talk about the unbelievable returns people are getting from cryptoassets since their emergence. That's what brought you here in the first place. You want to know how to make money investing in bitcoin. Right?

2017 biggest cryptoassets by profit

If you had bought 100, 000 naira worth of XRP on January 1, 2017. At the end of the year (31st December) you would have 36,118, 000 naira in your bank account as the return on your investment.

bitcoin price change 2011 to 2017
Ether price change 2016 to 2017
litecoin price change 2013 to 2018

Some cryptoassets have yielded massive returns for investors over the past few years; others, however, are outright fraud.

Moreover, how do we even explain this mania, or "bubble" as some would like to call it? Bitcoin investment appreciates more than 1, 000 per cent between 2016 and 2017, while investment in Ethereum during the same period was up about 9, 000 per cent. The total market capitalisation of all cryptoassets becomes ~$200 billion in less than nine years of the market's existence.


To get a sense of what’s going on, let’s look at the crowd mentality for the past two years.

Mob Mentality during the bull run

If you invested in Bitcoin or Ethereum in 2016, you are sitting on a windfall by mid-2017. You have excess money and feel smart and eager to sacrifice more than you otherwise would. Might as well diversify a bit and reap more gains from another cryptoasset, or two, or three.

Also, those that didn't invest earlier, the fear-of-missing-out continued to build until they eventually bought a popular cryptoasset. Many people just invested in these assets so as not to be left out. They jumped into the market and placed their bets on things that sounded complex and impressive.

“You only find out who is swimming naked when the tide goes out," said Warren Buffet in one of his letters to Berkshire Hathaway shareholders.

Prices of bitcoin and ether are dropping...

Bitcoin and Ether performance between January and August

Unfortunately, prices began to drop and returns dwindled. 

Consequently, some of those who went in without a good grasp of the long-term utility of cryptoassets sold their portion at a loss, losing some of their initial investments in the process.

It doesn't have to be this way. Speculating isn't bad, don't get us wrong. 

It's way better when you are grounded in common sense to identify proper investments from bad ones; you need to build up your knowledge of cryptoassets and be able to recognise when buying opportunities exist and when it's just the madness of the crowd out there.  

Fear of missing out (FOMO) is the all-consuming feeling of apprehension that you might be missing out on something others are enjoying. 

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In the long-run, the public adoption of a cryptoasset project would determine its value. While it’s still early days, there's some justification for the high valuations because of the potential impact of these technologies.


Want to see how we evaluate and rate cryptoassets? We have also thrown in our cryptoassets evaluation tool.                   

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The conversations around Bitcoin in Nigeria often limit people's perspective about cryptoassets in general. Most Nigerians commonly think of all these assets as just cryptocurrencies, and this could also be true for people in other parts of the world too. Cryptocurrencies are just one of the types of cryptoassets.

Cryptoassets exist as a mechanism to allocate resources to a specific form of organisation, just like other traditional asset classes

Corporate equities fund companies, government bonds fund nations, states and cities. Cryptoassets are a means of funding traditional and decentralised organisations.

Decentralised applications and organisations are a new model for developing, financing, and operating software services. They are much different from software as we know it today, and the organisations building them are operating with a decentralised structure.

More than half of all cryptoassets are not currencies.

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But why has there been so much confusion?

Bitcoin sparked the cryptoasset revolution, and its success opened the door to several other different innovative projects all powered by the blockchain technology - the decentralised digital ledger. However, Bitcoin continues to be the most popular cryptoasset, casting a massive shadow over other assets.

bitcoin market dominance 2018

Cryptoassets are divided into: cryptocurrencies, cryptocommodities and cryptotokens. 

Infographic showing types of cryptoassets and market size


Barely 20 years ago, when you required information from someone - or you need to send something relevant to a friend - you would send a letter. If you were lucky, three weeks later you might get a reply.

However, today while you’re on the street corner you can send a message to someone in another country and get a reply before you even walk across the street.

The email and internet may appear commonplace now because we are used to it. However, it was an incredible leap then. They radically changed our perception of life. We even had to evolve new vocabulary -- spam, lol & hashtag. 

So, why can't we extend that to payments?

Why do we have to wait for days before someone in another part of the world receives a transfer while still paying high transaction fees?  

Cue Bitc​​​​oin

This new technology allows us to securely send money directly to each other without going through banks. Magical!

It uses cryptography (a system of encryption and decryption) to ensure security and a public ledger --blockchain -- to record each person's possession, deposits and withdrawals.

The currency transferred on this technology is the bitcoin.

Notice "Bitcoin" and "bitcoin"?

- "Bitcoin" is the software. Think the IOS or the Android operating system.

- "bitcoin" is the native digital asset on the software. This currency makes debit and credit entries possible on the Bitcoin software.

The Demand Side of bitcoin

Bitcoin had zero value when it was launched -- meaning it couldn't buy anything. The early adopters and supporters subjectively valued the currency. However, as the utility of the network proved reliable, it started facilitating e-commerce, remittances, and international business-to-business payments.

Alongside the growth in utility, investors started to speculate on the future use cases which creates demand for bitcoin. 

How much is someone (a buyer) willing to pay for a certain quantity of bitcoin (the bid), and how much is another person (a seller) ready to receive to part with that quantity (the ask)? That is a template on investing in bitcoin. You buy and then hold till when others are ready to buy at a higher price, then you sell. 

The Supply Side of bitcoin

Bitcoin's issuance model is key to its value.

Remember Bitcoin is a decentralised application for payments? So, then, how do we ensure the integrity of payments and records when there are no banks?

Usually, when we forward a file through the internet to someone else what we send is a copy, but we can't allow that happen with money.

How do we ensure that people can't keep a copy of the money they already sent or even game the system?


The breakthrough solution was to let entities compete to record transactions on a public ledger. However, the system has to avoid designating one entity in advance or using the same one for every batch of transactions.

 Let’s call the entities competing for a chance to record transaction “miners.”

Also, to ensure true decentralisation, anyone can join this contest at any time because the code and network are open.

Still, how do we still ensure the integrity of records since random guys are now recording transactions instead of a central authority?

The system tasks these so-called miners to find a random number generated by the network. The number is tough to find, and the fastest way to solve it is to use tons of computer processing power and burn through electricity.

Why this difficult process?

It's just to be sure the competitors have incurred a real financial cost. With that we can be sure if they win the race to find the random number, they won’t use that power for manipulating transactions.

Instead, they carefully scan each pending transaction and ensure all rules are followed and broadcast that validated batch to the rest of the network.

If they follow the rules, the network is programmed to reward them with newly minted bitcoins, plus the transaction fees, in bitcoin, paid by the senders. 

Economic Interest of Miners

For the first four years of Bitcoin's life, a lucky miner was rewarded 50 bitcoin for winning a batch of transactions. However, the difficulty of this process is re-calibrated automatically every two weeks with the goal of keeping the amount of time between batches of transactions at an average of 10 minutes.

In the first year of bitcoin running, 300 bitcoins were released per hour (60 minutes, 10 minutes per batch, 50 bitcoins issued per batch), 7, 200 bitcoins per day, and 2.6 million bitcoin per year.

These miners sell their bitcoins to anyone willing to buy so they can recover their capital expenditure. The margin between the cost incurred and the selling price of the bitcoin is the profit for participating in the contest.

Ultimately, miners follow the standardised rules of the technology because it is in their economic self-interest to do the right thing. Just like it's in the best interest of any private business to do the right thing that puts them in a position to make profit year-on-year.

bitcoin supply and market size

Bitcoin's supply maxes out at 21 million units by 2140. This maximum limit is a function of dividing the units of supply released by a factor of 2 every four years.

Other Cryptocurrencies

Within a couple of years of the launch of Bitcoin, other developers worked on new cryptocurrency platforms that fixed some deficiencies of the Bitcoin protocol.   

Birth of altcoins

Altcoins are alternatives to Bitcoin. These other cryptocurrencies aim to solve the limitations of the Bitcoin protocol - and they can do that because the protocol is open-source. These cryptocurrencies operate similar to Bitcoin but now require their own set of developers to manage it and a different digital ledger to keep track of the debits and credits of the new digital asset.

​Litecoin, XRP, Dogecoin, Dash, Monero and ZCash all fall under this category. We have a post on XRP that gets you started investing in the asset.

The demand side of altcoins maintain the same principle as Bitcoin, but most have a different supply side.


Chris Burniske and Jack Tatar, in their book Cryptoassets: The Innovative Investor's Guide to Bitcoin and Beyond, aptly defined cryptocommodities as assets "provisioning raw digital resources." They are raw materials that serve as inputs into finished products. 

We are used to physical commodities like wheat, oil, cocoa and rubber. However, to assume commodities can only be physical ignores the digital trend occurring in every aspect of the world's economy. Some of the digital products we have now include storage capacity, compute power and network bandwidth.

The largest cryptocommodity is Ethereum. It's a decentralised world computer upon which you can build decentralised applications. Ethereum provides a tangible digital resource that developers can use to create consumer-facing digital products and services.


The largest cryptocommodity is Ethereum. It's a decentralised world computer upon which you can build decentralised applications. Ethereum provides a tangible digital resource that developers can use to create consumer-facing digital products and services.

You may have heard of “initial coin offerings” (ICOs). Most of the projects offering ICO are on the Ethereum platform. 

Ether is the native cryptoasset on Ethereum’s software. The currency is used to compensate people who contributed their computing resources to the network and incentivise developers to write applications on the software.

Other interesting cryptocommodities that function similar to the Ethereum are EOS, Ethereum Classic, Neo and Waves. 


The native assets on the decentralised applications built on cryptocommodities are called cryptotokens. These decentralised applications mostly provide a consumer-facing product or service.

The consumer-facing products in the digital world include social media and games. Cryptotokens give consumers access to these products.

You can exchange your cryptotokens for specific services like distributed storage, video game and social media applications.

Example: If a developer plans to launch a decentralised video game that requires the use of in-game currency. This currency could be offered to investors to raise money to develop the game. Investors (future users or speculators) can buy these tokens at the time of the initial offering if they believe in the potential of the game to attract future users.

Finally, software-as-a-service or video games are not new; Electronic payments too. What’s new is that everyone in that gaming community can own them.

How to buy and sell bitcoin in Nigeria 

Purchasing a cryptoasset (Bitcoin, Bitcoin Cash, Ethereum, Litecoin and XRP) with cash can be as easy as buying groceries in a shopping mall.

There are platforms on the web that offer the opportunity to buy - and also sell - your cryptoassets at any point in time. 

​How to buy bitcoin in Nigeria through an exchange

The easiest way to buy ​bitcoin in Nigeria with Naira is on a centralised exchange. ​Guava ​Exchange, Luno, and NairaEx ​are some of the ​best sites to sell bitcoin in Nigeria.

Guava Exchange​ offers you a simple interface to buy bitcoin in Nigeria. We help busy people learn about, invest in and manage digital assets in a safe and secure environment. All you need to do is create an account and verify your identity. After that, you can buy bitcoin, Ether or XRP with your bank account details.

Guava bitcoin signup process

You can sell bitcoin in pretty much any exchange you bought your cryptoasset. 

How to sell bitcoin in Nigeria

If you’ve bought from an exchange before, then you should already have an account. If you’re happy to sell your asset through your account there, then you’ve already completed the first steps.

However, if for some reason you don’t want to use the exchange you bought from; or if you did not acquire your asset through an exchange, but you do want to sell through one. Then you need to open an account with the cryptocurrency exchange that you want to use.

It’s important to evaluate your options in advance as most exchanges typically have security and anti-money laundering procedures they carry out with new customers. That process can take time -- a day or two.

Creating a "sell" order

Once verified on an exchange, then you need to create a "sell order." That authorises the exchange to help you sell your asset at a given rate. Some cryptocurrency exchanges allow you to add a limit. That means you can abort the sale if the price falls below a certain amount that wouldn't be profitable.

Cryptocurrency exchanges, however, offer different sell rates. Could be based on the volume of buyers and sellers on the exchange and how much they are currently willing to buy a specific cryptocurrency. 

Trading Pairs

You can trade your bitcoins for Ether, XRP, Litecoin and other cryptoassets. Similarly, you can trade your Ether for other cryptoassets including bitcoin.

Many centralised exchanges let you trade for other assets directly. Examples are Bittrex, CoinEx and Binance. 

Which exchange should I use? 

These are some of the things to examine before choosing an exchange:

- Security

The steady growth of Bitcoin in Nigeria and exchanges mean new security challenges might begin to spring up. No one likes to lose their money. Find out whether the exchange you intend to register with has been previously hacked or not, and what their security process is.

Another security concern you need to figure out is whether the exchange has other forms of user authentication during login. 

For example, most exchanges would demand a 2FA code each time you attempt to use their website. Also, if your IP address changes from the regular one to a new address, the system verifies you before you log in.

- Customer Service

Customer service is a challenge for most exchanges. Even the most reputable exchanges are fraught with customer service challenge.

However, this an essential factor. An exchange must be able to resolve its customers’ issues within the shortest possible time. 

If you attempt to contact the customer service unit of exchange, and the only available option is through their FAQ page, without providing phone numbers and email, then it is a red flag.

- Cryptoassets listed on the exchange

Some cryptocurrency exchange offer just bitcoin and ether. It would help if you looked out for exchanges that provide more coins to give you the opportunity to diversify your investment.

Peer-to-peer exchanges

These exchanges match buyers with sellers to trade directly. The sellers get to set their price and how they want to receive their payment.​

LocalBitcoins is a typical example. It works worldwide as an advertising community board for users to agree on a price beforehand and then trade.  

It might seem dangerous as it involves strangers, but it is still popular and has excellent reviews from users. You have to figure out a way to store your cryptoasset yourself if you intend on using a peer-to-peer exchange. 

Storing your cryptoassets  

How do you secure your Bitcoin investments? That is what this section predominantly answers. The buying and storage of cryptoassets are two separate decisions. When you buy from an online exchange though, they help you store your cryptoassets.

What does it even mean to store your cryptoasset?

Each cryptoasset comes with a private key that proves your ownership. You can think of a private key as a string of digits the network uses to validate whether you own a portion of cryptoasset or not. 

So, if someone were to know your private key, they would also have access to your asset, and that is dangerous in the hands of the wrong person.


Your private key is what needs to be secured. That key can be in a hot wallet or cold storage.

Don't let these new terms rattle you. It's simple. 

Hot Wallet

This wallet works with the Internet. It means you can access your cryptoassets directly through a web browser, or through a desktop or mobile application connected to the Internet. Also means you are susceptible to online hackers.

Cold Storage

You can disconnect this storage from the internet. The private key would have to be physically stolen to gain access to your cryptoasset.  

If you don't want to store your cryptoassets on an exchange, you should consider one of the following wallet options:

Web Wallets

They aren't so different from exchanges. Your private keys are still outside your control and in the hands of a centralised third party. You can access a web wallet from anywhere.  A web wallet provider makes you set a password which it uses to encrypt your wallet on its server.

Desktop Wallets

This wallet is a software application downloaded on your personal computer. The private key is now on your computer. You have full control of your key. There are two different types of these applications. Examples are Electrum, Exodus, Coinomi and Jaxx.

Mobile Wallets

These wallets store the private key on your smartphone. You can use them on the go should you need to transfer your asset to friends, pay for transactions at shops that accept bitcoin in Nigeria. A few popular ones include Airbitz and Breadwallet. 

Hardware Wallets

These keep private keys secure on a dedicated hardware device. There are different types. While some offer a full suite of key generation, storage, and sending capabilities; others used as an extra layer of transaction confirmation security, and there are those you still have to plug into a computer to work. 

Hardware wallets don't often support a wide array of cryptoassets and are more expensive than other wallet types because they require specific hardware engineering.

Some of the commercial hardware wallets include Ledger Nano S, KeepKey, Pi Wallet and Trezor.

Paper Wallets

It is an offline wallet usually made out of paper or other items that have a printable space. There are free web services that can generate a printable wallet for you.

The general security advice would be to clear your browser after printing and delete the copy of the paper wallet from your computer or phone.

Examples of cryptoasset wallets


Web Wallet

Desktop Wallet

Mobile Wallet

Hardware Wallet

Bitcoin,   Bonpay, Gatehub

Exodus, Electrum,Bitcoin Core, Armoury, Coinomi, Jaxx

Myceliu, Airbitz 

Ledger Nano S, KeepKey, Pi Wallet, Trezor


MyEtherWallet,, MyCrypto

Mist, Exodus

LykkeWallet, Edge

Ledger Nano S





Ledger Blue

Bitcoin Cash



Ledger Blue





Ledger Blue





Ledger Blue

How to make money with bitcoin and mitigating risks

Bitcoin Investment

Investing in bitcoin is about taking long-term positions, focusing more on asset fundamentals than immediate profits/returns. An uncomplicated approach to investing overtime is through dollar cost averaging.

Dollar cost averaging (DCA)

According to Investopedia, this is an investment technique of buying a fixed amount of a particular investment on a regular schedule, regardless of an asset's price.

Instead of investing a lump sum, an investor can build their investment portfolio over time. In doing this, you may buy at the peak but also buy all the way to the bottom.

Example of how to use DCA  

(This example's adapted from

Let's assume you buy 10,000 worth of bitcoin in Nigeria on the first of each month. Let's make the assumption, for convenience sake, that the price of bitcoin on the beginning of each month was as follows:

• January: $20

• February: $16

• March: $12

• April: $17

• May: $23

(Another assumption we'll make is 1 naira = 1 dollar)

On the first day of each month, the number of bitcoin purchased each month is equal to:

• January = 10,000 naira / $20 = 500

• Febuary = 10,000 naira / $16 = 625

• March = 10,000 naira/ $12 = 833.3

• April = 10,000 naira/ $17 = 588.2

• May = 10,000 naira/ $23 = 434.8

As a result of using DCA, the total number of bitcoins the investor now own is 2,981.3. Also, the average price paid for each of that bitcoin is $16.77. If the investor decides to sell off all his bitcoins at the current price of $23 in May, this means an original investment of 10,000 has turned into 68, 570 naira (rounded up to the nearest whole number).

Returns on your Bitcoin investment

If you had invested all 10,000 naira on one of those months instead of spreading the investment across five months, the total profitability of the position would be higher or lower than 68, 570 naira depending on the month chosen for the investment.

What should you consider before investing?

The United States Securities and Exchange Commission advises to:

1. Draw a personal financial roadmap. 

Before making any investment decision, take an honest look at your current financial situation.

Figure out your goals and risk tolerance – either on your own or with the help of a financial advisor. Bitcoin and other cryptoassets fall in the category of risky assets.

Before you make any investment decision, sit down and take an honest look at your entire financial situation. 

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2. Evaluate your comfort zone in taking on risk.  

All sound investments involve some degree of risk. The money you invest in cryptoassets is not federally insured or guaranteed. You could lose the amount you've invested.  

The reward for taking on risk is always the potential for a higher investment return.   

3. Consider an appropriate mix of investments.  

Including asset categories with investment returns that move up and down under different market conditions within a portfolio can help an investor protect against significant losses. 

When you invest in more than one asset category, you'll reduce the risk of losing all your money. Don't put all your eggs in one basket.

5. Consider dollar cost averaging.

We explained how to do that above.

6. Consider rebalancing portfolio occasionally.

This technique involves bringing your portfolio back to your original asset allocation mix.  It ensures your portfolio does not overemphasise one or more asset categories.

It also forces you to buy low and sell high.

Also, you can do this on a regular time interval, such as every six or twelve months; or when the relative weight of an asset class increases or decreases more than a certain percentage that you've identified in advance.  

7. Avoid circumstances that can lead to fraud.

Always take your time before investing.

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Scam artists read the headlines, too. Because there's no government regulation for exchanges selling Bitcoin in Nigeria, it's important to be wary of the crooks trying to swindle unsuspecting investors. Always do your research and take your time before investing.