Internet Shut Down Strangles Bitcoin Trading in Uganda

The president of Uganda has the power to shut down the entire internet in the country. He used his powers before the presidential elections to ensure he wins a sixth term. This, however, caused a complete wipeout of the Bitcoin trading sector in the country.

Ugandan President stops the internet

After attaining power via a coup in 1986, Ugandan president Yoweri Museveni is trying hard to get his sixth term. In the run-up to the elections on Thursday, he shut down the internet in the entire country. The police also harassed and arrested his opponent Bobi wine, a former popstar-turned-politician. Opposition events were shut down on the pretext of COVID-19 and access to social media apps like Twitter, Facebook, and WhatsApp was blocked.

Ugandans used VPNs to circumvent the ban after which the Uganda Communications Commission decided to put the entire internet to a stop indefinitely. Internet service providers have also been asked to suspend the operations of international gateways in the country. Head of Uganda Internet Exchange Point, Kyle Spencer, said that Uganda was cut off from the world and its domestic internet traffic dropped by 95% in just one day. The non-profit works on improving internet connectivity in the country.

Bitcoin market wiped out

Analytics site UsefulTulips said that there was no Bitcoin trading activity on peer-to-peer exchanges like Paxful and LocalBitcoins in the country since January 14. The Uganda shilling (UGX) site on Paxful had sell offers from Kenyans, Nigerians, and Ghanaians but lacked any offers from Ugandans. LocalBitcoins also had UGX traders from neighboring countries like the Democratic Republic of Congo, Tanzania, and Rwanda.

The Uganda Bitcoin market is relatively small and the P2P trade in the coin fluctuates between $5,000 to $15,000 per day. Even Binance was forced to shut down its local website because of low trading volumes. Bitcoin, however, continues to be popular in economies with monopolies and authoritarian governments. In Uganda too, about 60% of the mobile phone market is controlled by MTN Uganda.