Cryptocurrency is a type of autonomous digital money that gets used via the web. Here in Nigeria, there are ways you can earn interest and make passive income in crypto. Bitcoin, which debuted in 2008, was the earliest cryptocurrency and is now considered to be the most popular, valuable, and well-known.
However, since 2008, other crypto coins such as Ethereum have gained popularity as digital alternatives to government-issued money. Moreover, in our societies today, cryptocurrency is now considered a payment option on various e-commerce-related websites.
In this article, we will discuss how you can earn interest on crypto in Nigeria and how you can invest in your cryptocurrency.
What is a cryptocurrency?
Cryptocurrency is a digital and decentralized currency used to purchase goods and services. It uses cryptography to secure online transactions and also eliminate double-spending.
The supply, demand, and use of cryptocurrencies are strictly decentralized, not controlled by any central authority, and mostly built on blockchain technology.
How to Earn Interest on Crypto in Nigeria in 2024
Nigeria was ranked first in Africa’s crypto adoption index and sixth in the world in 2021. This shows that Nigerians are fully utilizing the opportunities of this beautiful innovation.
Earning interest in crypto in Nigeria typically involves utilizing cryptocurrency lending platforms or decentralized finance (DeFi) protocols. Let’s look at some of the ways you can earn interest in crypto in Nigeria:
1. Crypto Staking
Crypto staking is the act of locking cryptocurrency in a crypto platform over some time to earn profit. Staking in crypto can either be flexible or fixed.
A flexible crypto staking allows the investor to withdraw the funds anytime, but a fixed crypto staking only enables the withdrawal of funds after an agreed-upon period has elapsed.
Some centralized platforms where you can practice crypto staking include Binance, Crypto.com, and some decentralized ones like Uniswap.
2. Crypto Lending
In addition to staking, crypto investors can earn interest via crypto lending.
To lend crypto, investors need to find a cryptocurrency exchange or decentralized finance (DeFi) app that offers a crypto interest account, which is similar to traditional savings accounts offered by banks.
Some lending accounts pay variable crypto interest rates, and some pay set crypto interest rates for coins locked up for a specific time, similar to traditional certificates of deposit (CDs).
3. Crypto Mining
The list is not complete without including crypto mining in it. Crypto mining is simply solving cryptographic equations for the next block in a blockchain using a mining machine to earn rewards. A miner’s compensation depends on how many problems he can solve.
Crypto mining can be solo mining, which requires one person, or pool mining, which involves a group of miners.
However, joining pool mining with other miners is advisable because it is faster, and the reward is always huge due to the considerable effort. The prize is usually shared among the miners who contributed to the pool according to each person’s hashing power.
Where to Earn Interest in Crypto in Nigeria
Investors can stake crypto through a crypto exchange or their crypto wallets. The yield investors can expect from their staked cryptocurrency varies depending on which crypto they stake and which platform they use.
Gemini, KuCoin, Kraken, and Coinbase (COIN) are among some of the most popular crypto exchanges for staking.
For example, Coinbase currently advertises an annual percentage yield (APY) of up to 5.75% for staking cryptocurrency, including 3.675% for Ethereum and 2.6% for Cardano.
Crypto investors also have various choices to earn interest on crypto lending, although the market is somewhat chaotic for crypto lending platforms at the moment.
According to current Crypto.com interest rates, investors can earn up to 14.5% APY in their Crypto Earn accounts, including 5% APY on Bitcoin (BTC) and 6% APY on Ethereum (ETH) at the time of writing.
Unfortunately, popular crypto lending platforms like Voyager Digital, BlockFi, and Celsius have recently been forced to freeze customers’ assets as they deal with liquidity crises associated with the recent crypto winter.
Pros and Cons of Earning Interest in Crypto
There are advantages and disadvantages to earning interest on cryptocurrency holdings.
In Nigeria, the interest rates to earn crypto staking and crypto lending are typically much higher than interest rates on stocks or high-yield savings accounts.
For investors who have already determined they are holding cryptocurrency for the long term, staking or lending can be an attractive source of earning interest. In addition, interest compounds over time, increasing the potential earnings power of crypto if investors reinvest their interest.
The biggest downside of earning interest on crypto is the risk associated with staking and lending. That’s partly because not all crypto exchanges or lending platforms ensure account holders’ funds.
Furthermore, cryptocurrency markets themselves are extremely volatile, which creates its own risks. Even cryptocurrency investors earning interest rates of 10% or 15% are still extremely deep underwater on their investments this year. For example, Bitcoin prices are down 56% year to date, while Ethereum prices are down 67%.
How to Invest in Cryptocurrency in Nigeria
Follow these guidelines if you want to invest and earn interest later in crypto.
1. Create an Account in any Crypto Website
Just like any financial system, you will have to properly register with or create an account with any crypto website of your choice. This account you create will serve as a unique pocket or wallet for you to trade in crypto with.
Different websites have different registration processes, so be sure to follow the process of the website you choose carefully. Provide any personal or contact details they ask of you, and make sure you provide an active email.
2. Verify Your Identity (KYC)
As a Nigerian who surfs the internet regularly, you should have come across this term or feature in one way or another. KYC is an acronym for “Know Your Customer,” which simply refers to the verification of a customer’s identity.
Almost every crypto website you wish to earn some interest from in Nigeria will definitely request a KYC verification upon successful registration. In this stage, they may ask you to snap and send a picture of any of your government-issued ID cards.
Please know that a lot of crypto websites in Nigeria will not allow you to do anything else without completing the KYC verification first.
So be sure to finish this step as required. Also, ensure that you provide accurate details to avoid the banning or deactivation of your account.
3. Deposit Money into Your Crypto Wallet
Once you have successfully completed the registration and verification stages, you are now free to proceed with the deposit. Note that some websites may ask you to create wallets separately to represent each coin you wish to invest in.
Others, however, may just grant you a single wallet where your deposits are stored and converted to any coin of your choice.
When it comes to how to deposit, some of the websites we listed above offer three easy options for people in Nigeria. The first is the card payment option, where they tend to accept payments from Visa or Mastercard.
The second option may come as a USSD code option, where you will be given a set of codes to dial on your phone and approve the payment from your bank. Finally, very few websites usually offer an online bank transfer option for you to try out.
In essence, just go through the payment options your chosen website has and pick the one that best suits you.
4. Invest in any Crypto Coin of your Choice
Earlier, we talked about some of the popular crypto coins you can trade within Nigeria. Lucky for you, the majority of the crypto websites in Nigeria will allow you to earn interest from these coins.
After you have deposited some money into your newly created account, the easiest way to earn money is to just invest in a specific coin. If your website permits it and you really want to, you are still free to invest in multiple coins at a time.
All you have to do is just transfer some of your money into the wallet for the coin you desire. Easy as that. Now you just have to keep hoping that the coin’s worth increases so that you can have some reasonable gain.
Conclusion
Trying to earn interest in crypto in Nigeria presents a promising opportunity for individuals to generate passive income and grow their wealth in the digital asset space.
By leveraging cryptocurrency lending platforms and decentralized finance (DeFi) protocols, Nigerians can harness the potential of their crypto holdings to earn attractive interest rates.
However, it’s crucial to conduct thorough research, choose reputable platforms, and understand the associated risks before committing funds.
With proper diligence and risk management, individuals can participate in interest-earning activities in the crypto market, contributing to their financial goals while navigating the dynamic landscape of the blockchain ecosystem.
