Source: Nairametrics

A few days ago, a heated argument ensued on X (formerly Twitter) between many Nigerians belonging to two different schools of thought.

What was this argument about?

On one hand, some believe that Binance P2P should be regulated as it’s the cause of the recent consistent increase in the price of US Dollar against Naira.

On the other hand, some believe that the above school of thought is unwise and a means to shift blame from the actual cause of the predicament.

Let’s take a look at what’s been going on recently.

What is Binance P2P?

Binance P2P is a peer-to-peer platform that allows people to buy and sell cryptocurrencies with their local fees. Meaning, as a Nigerian you can buy Bitcoin with Naira on Binance P2P. Since its inception in Nigeria in 2020, Binance P2P has gained a lot of attention from Nigerians who see it as a better means to trade and convert their Naira.

P2P traders are responsible for ensuring seamless swap between currencies. If you wish to buy Ethereum on Binance, for instance, you send Naira to a P2P trader and get Ethereum in return.

The process is usually seamless.

What seems to be the problem:

Earlier this year, the rate of dollar-to-naira was around N750/$1. Since the 2nd half of the year, it has been on a constant increase and it’s been even worse this month. This month alone, it has gone from N990/$1 to N1300/$1 in just a matter of a few weeks. As at the time of writing, it's sitting at N1400/$1, according to a Binance P2P trader I asked. This has led Nigerians to pour out their frustration on various bodies. I mean it’s understandable because the increasing rate of the dollar further decreases the value of the Naira, making things very expensive to purchase.

Bet you've been seeing the above image trending recently.

"Dollar don rise na." "Abi u no dy this country? You no know say dollar don rise again?"

This is the normal response of every seller you purchase from anytime you ask why there is a sudden increase in the price of their products.

Something you bought for a thousand naira just last week can be double the price today. Now who is to blame for this?

Who are the receivers of the blame? First School of Thought

There is a belief that Nigerian Binance P2P traders are the ones intentionally inflating the exchange rate in their bid to make massive profit and also launder their dirty money.

Now this is a big accusation and there hasn't been enough evidence to back this up. It is believed that many other exchange bodies like bureau de change, Aboki FX (a popular platform to get live exchange rates and exchange foreign currencies) use Binance to determine their own exchange rates, hence, the reason for the backlash on Binance P2P traders. Binance P2P is now even called Nigeria's largest black market.

Binance is undoubtedly the biggest crypto exchange especially in this part of the world. Many use it not only to trade cryptocurrencies, but to convert their naira to dollars and to save as it’s becoming more economical to do so in fighting inflation. We should be aware by now that USD rate follows USDT and vice versa. So you can see how Binance got into the picture.

So those who believe that Binance P2P traders are the cause of the increasing dollar rate are calling for Binance P2P to be regulated as this would help stabilize naira. They are calling on the Nigerian government to ban anything related to naira trade on Binance but it is quite obvious that the Nigerian government has lost grip of the economy’s monetary control. There is also a call out for the Central Bank of Nigeria to sanction those Binance P2P traders with high fees for selling above CBN official rate.

The other receivers of the blame? Second School of Thought

Nothing much here, just the usual. The other set of people are still of the belief that the Nigerian government is at fault for this naira constant decline. They believe that these Binance P2P traders are only responding to demand and supply of the currency and are not responsible for inflating the rate.

“Naira was allowed to float by CBN, but let’s blame Binance P2P for crashing the Naira charts,” an X user tweeted.

“Regulating Binance P2P in regards to the exchange rate fluctuations is more like seeing a temporary solution for a permanent problem,” another user tweeted.

"So you wan blame crypto exchanges now, you forget say parallel market dey and they sell same price. Exchanges use parallel market price, they ain't the ones that determine the price. Na still people for government dy cause am."

"No one can spike the rate. It's the law of demand and supply at play." Yet another X user stated.

"CBN couldn't regulate the naira. Businessmen are the least people who have the power to regulate the naira. They are simply responding to demand and supply."

"Nah, binance P2P isn't even close to the people moving currency at bureau de change."

"Make so many wrong decisions then blame the market for doing what the market does. How much volume do you think people trade on Binance P2P daily?"

"If you think Binance P2P should be regulated because it's the reason for the naira's free fall, please delete that tweet and never comment on FX again," an angry X user tweeted.

"Banning P2P, crypto or any other means of transferring $ to Nigeria is as stupid as cutting trees to defend the value of the naira."

Over to you. What are your thoughts on this?

Do you think Binance P2P is to be blamed for the constant decline in naira value? Why?

Do you think the Nigerian government is the cause? Why?

Do you think there are other parties at play here? Please interest us with your thoughts.