Cryptocurrency is a big opportunity, says the famous crypto masterclass founder, Tola Fadugbagbe.
How big of an opportunity is it really?
Let’s talk through it together.
Many Nigerians are yet to grasp this whole fad about digital currency and its effect on the financial market. Talk more of embarrassing its future. I mean, there are a bunch of people on the streets of Lagos who do not own a bank account and have no interest in any financial institution. Talk more about the number of people that are unaware of the potentiality of cryptocurrency.
This puts the CBN a few steps ahead of many business sectors and individuals that stand to benefit from a future where the currency is digital.
So, how big of an opportunity is the cryptocurrency for Nigerians?
Cryptocurrency and Its Future in Nigeria
Benefits Of Cryptocurrency in Nigeria
Scalability to How We Spend Money
The Current Problem with Money in Nigeria
The Problem with Cryptocurrency
Security Concerns for Coin Wallet
Before delving into the future of cryptocurrency in Nigeria, we must first talk about its past. Only then can one come to terms with the pretended future of cryptocurrency and the consequences of the CBN current restrictions and intended altcoin.
Contents
Nigeria Before Crypto
Let’s take a look at a few facts. Before the age of digital currency, Nigeria ranked 26th in the world economy.
Then Crypto came, and it eliminated the limits, and more people could do business online with other countries, and bam! We shot up that ladder and were ranked 16th.
I mean, sending money across countries has always created such a hassle. Sending money into Nigeria became more stressful.
I recently realised I couldn’t pay for services like purchasing an app or renewing my iCloud storage using my local bank’s Mastercard. The stress of finding whose card I could borrow to perform certain international transactions was a real bother, and I realise I could do without this stress.
Talk about the whole stock exchange palava with the Nigerian currency, rich in naira, and broke in the dollar.
Then there is that endless unexplainable deduction from banks and complaints about the limitations of our local currency. These complaints are not particularly peculiar to Nigeria, but they fueled the need for a currency that eliminates these risks.
Benefits Of Cryptocurrency in Nigeria
What’s in it for you and me as Nigerians?
Scalability to How We Spend Money
Imagine being able to do so much with your money and not deal with all the middle management, AKA banks. It may seem like a leap into the past in a certain way where an individual’s negotiating power determined prices. Everyone did whatever they wanted with the money they had in their wallet.
Indeed the ability to deal directly with whomever we are transacting with at any given point is bliss.
Think of the barter system when a man deals directly with customers and clients. None of all that issue where you make a transfer to one bank and both parties get deductions.
But before you say, why try to fix what isn’t broken? You need to understand that banks aren’t exactly monsters, but in an age when we could do more, why settle for less?
Ease of Commerce
I stated earlier that Nigeria’s position in the world economy has since improved thanks to crypto-traders. In the US, Crypto was readily adopted as a form of currency for services and in trade. People converted their hard cash to digital coins, although they had issues given that they were part of the first people to use it on such a scale.
Smart contract
A smart contract creates an insurance policy between traders. The contract serves as an agreement between any individuals carrying out transactions at any given time. Due to the absence of KYC (Know your customer), all coins are first held in a smart contract till the sales have been confirmed before they can be released to the appropriate party.
Volatility
It makes for employment opportunities through crypto trading.
Curbs Inflation
The creator of bitcoin from the origin programmed a limit in the number of coins in circulation. Inflation arises due to excess money in circulation, and crypto curbs these acts from ever happening.
Financial Security
Coins held in wallets increase in value. Let me explain.
If you were on Twitter just before the ban, you’d remember how many people panicked about how fast their coin depreciated. It became scary even to get anyone to invest in cryptocurrency.
What was all the panic about buying or not buying the dip?
There’s a given number of coins that can be in circulation at any given point. If the number is exceeded, the computer automatically deletes the excess, but the price on the coin that’s left increases value.
When people buy and hold their coins, the value increases. But what led to the drop in value was that many people were selling out of panic. It’s the same with the stock exchange market; any small news can influence stockholders to sell their current stock in any company for fear that such a company was losing its value or its sales had dropped, and their returns are no longer guaranteed.
I remember when Snapchat lost its value because people pulled out when Kylie Jenner said she doubts anyone made use of Snapchat.
The Current Problem with Money in Nigeria
For one thing, it costs to maintain money but is Crypto the alternate solution?
Recently I observed my bank statement, and then I told my sister that I was just about done with local banks and all their drama. I may not be big on banks, but I know when something smells phoney.
I remember the joke on Twitter that you could keep as much as seven thousand nairas in your savings account for a couple of months, and when you return, you’d be lucky to find a thousand naira.
It became more and more unreasonable to store money in financial institutions, and this lack of trust drove many to use online banks and eventually cryptocurrency.
With paper money, stockbrokers determine the value of a given currency, and they do this through publicly traded companies listed on the stock exchange. However, Crypto created an avenue for any given individual to deal directly.
One day a naira had equal value with one dollar, and another time, the value dropped to as much as five hundred naira to a dollar.
Keeping assets in Nigerian currency became a problem for many individuals, causing them to risk the idea of a currency that eliminates such issues.
The Problem with Cryptocurrency
Newness
Since it is still a budding concept and is not widely accepted, Crypto has a lot of grey areas.
Now the intent for which Crypto was created and the thoughtfulness in its design has contributed to its immense success. But perhaps its greatest strength has also posed as a great weakness. That’s the lack of KYC (Know your customer).
This enabled the initial users of Crypto to carry out secret and near terrorist transactions and whatnot. It spiked distrust and damaged the image of Crypto in the eye of the public.
Lack of Understanding
The second problem with Crypto can be summed in this conversation from Big Brother Nigeria. While drafting this article, I overheard a housemate talking about his experience as an average Nigerian.
So I’m watching White Money talk about the fact that he doesn’t understand Crypto and has not been open to adopting it as a trading system. He tells his customers that he can accept cash and transfer with a POS but not Crypto because the more his friends post about it on social media, the more confused he gets.
Here’s a guy hustling like everyone else, giving his opinion on the whole cryptocurrency craze. But who’s to say things can’t take a turn for good.
For business opportunities in cryptocurrency, read this article.
Security Concerns and CBN’s Attempted Regulation on Crypto
Banks weren’t always so secure. I remember when banks foreclosed, and many individuals suffered significant losses, including many famed footballers in Nigeria.
The lack of regulation has also made it problematic for a country like Nigeria that has taken its sweet time to get in line with technological advancement worldwide.
Acceptability
Before money became the accepted legal tender, people had questions and concerns. People still have questions and concerns if any of it was worth it.
However, if we toss government regulations into the mix, cryptocurrency may lose its essence.
This is why many crypto traders kicked against the CBN attempt to bring in regulation to the coin market.
Alternatively, what the CBN and other government currency regulators can do is create an altcoin permissible for trade. This does not impact the use of already existing currencies such as bitcoin.
So we’d then have the centralised coin and then the decentralised coin. A centralised coin refers to any alternate coin that the government or banks regulate, while a decentralised coin refers to the coin whose price is controlled by those who hold it.
Demystifying Cryptocurrency
Bitcoin is a decentralised digital currency that uses cryptography to secure transactions. Bitcoin transactions are recorded in a digital ledger called a blockchain.
I remember my class lessons on money and how the world evolved from the batter system. I remember the drawings of people who buried their money as a form of security, and then they forgot the exact location, or worse, it was stolen. Paper Money was the new wave.- the newly accepted form of trade. Banks were the middlemen. I imagine it must have felt like the dawn of a new age.
I wonder if some might have feared the idea of change.
Then came the idea of a cashless economy, and for some reason, people adjusted to that idea just fine because many of the financial structures they knew were still relevant.
So why the aversion to cryptocurrency?
For a start, many people do not understand the concept of computer-based currency? Some have concerns about hackers and all. Not everyone is tech-savvy.
How about when big players try to control the coin’s price by buying a more significant cut of the number of coins in circulation?
Coin Mining
What does your friend mean when they upload on their status that they’ve been mining coins?
Cryptocurrency relies on supercomputers to perform complex algorithms to ensure that a coin transaction moves from one wallet to another. Such computers require a constant power supply and 24hours access to the internet.
So when a coin is created and is yet to become an accepted currency in the coin market, creators need people to perform simple tasks like sharing a link or making a post on social media to help promote the use of or the knowledge of the coin and the usage of such platforms. For every task performed, such individuals are rewarded with a token informing them of the coin. These individuals are said to be mining for coins, and with time, they hope that when this coin becomes an accepted form of trade, they’d have a good amount in their wallet and sell it for profit.
The second way a coin is mined is that miners own supercomputers that assist in coin transactions. For every number of algorithms the supercomputer performs in a day, the owner receives a fraction of that transaction which is known as transaction charge, not unlike the banks charge on every text alert or Interswitch transaction.
Nigeria’s Current Stand on Cryptocurrency
The primary reason for considering alternate measures for financial assurance has been for security against theft and overcoming the current limitations of the financial institutes.
However, there are so many questions that need to be answered when the CBN plans to step in to regulate the coin market. Who can own these supercomputers if multiple Nigerians opt to embrace this form of trade? Is the cost any different when compared to maintaining current financial solutions such as banks?
With the recorded challenges to promote a cashless economy in Nigeria, how soon will cryptocurrency take over existing tenders? Would Crypto resolve issues like misuse of public funds in Nigeria?
There is so much to answer.
I know that whenever the government feigns to put its finger in any file, the ultimate goal is to see where the money goes and tax it.
Quick Summary
Prefer the short version? Here is a concise recap of the key ideas in this article.
Cryptocurrency and Its Future in Nigeria Nigeria Before Crypto Benefits Of Cryptocurrency in Nigeria Scalability to How We Spend Money Ease of Commerce Smart contract Volatility Curbs Inflation Financial Security The Current Problem with Money in Nigeria The Problem with Cryptocurrency Newness Lack of Understanding Security Concerns Acceptability Demystifying Cryptocurrency Coin Mining Security Concerns for Coin Wallet Before delving into the future of cryptocurrency in Nigeria, we must first talk about its past. A centralised coin refers to any alternate coin that the government or banks regulate, while a decentralised coin refers to the coin whose price is controlled by.
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