Nigeria is home to over 200 million people, boasting one of Africa’s greatest number of young and tech-savvy people, making it Africa’s largest economy. So it is no surprise to see it recording a large cryptocurrency trading volume.
Cryptocurrency is a money-like currency that leverages on the digital space for its existence. It can be used as a medium of exchange, to buy and sell, to keep and hold just like any kind of physical currency. It also appreciates and depreciates depending on various determinants such as rate of acceptance and usage.
It is clear that the rising number of Nigerians patronizing cryptocurrencies reflects the lack of high yielding investment options amidst a significant decline in the purchasing power of households. Recently, the World Bank highlighted that 7 million Nigerians were pushed into poverty by the continued rise in consumer prices (especially food).
A recent news report says an increasing number of Nigerian youths are investing in cryptocurrencies despite the Central Bank of Nigeria ordering banks to “identify persons and/or entities” who were conducting transactions in crypto or running crypto exchanges and “ensure that such accounts are closed immediately.”
Central Bank of Nigeria Governor, Godwin Emefiele.
The increased use of cryptocurrency is rooted in a sharp fall in remittances as Nigeria’s currency, the naira, got exposed to weakened demand, coupled with growing unrest among a significant number of Nigerian youths who are unemployed.
Nigeria stands to gain immensely from Blockchain technology with PricewaterhouseCoopers reporting the global economy stands to gain about $1.7 trillion in the next decade via the use of Blockchain technology thus creating numerous job openings.
Chinedu Obidiegwu, Business Development Lead at Luno Nigeria- a cryptocurrency platform, also spoke on the socio-economic gains the crypto market brings to Africa’s most populous country.
“With record-high unemployment numbers, the emergence of the Crypto market has seen sizable. Fintech and Media platforms, and more, set up shop in Nigeria, which has created jobs either locally or remotely for many Nigerians. In reality, this vast job opportunity pales in comparison to the socio-economic benefit young and old Nigerians have experienced with the ability to be part of a truly global financial system at the click of a button and earn an honest living.”
Despite the many benefits associated with the use of cryptocurrencies such as speed, and accessibility, the opacity of cryptocurrencies that have made them become well-suited for conducting many illegal activities such as money laundering, terrorism financing, purchase of small arms and light weapons, and tax evasion.
Unlike fiat money which is accompanied by full faith and comfort of a country or Central Bank, cryptocurrencies do not have any intrinsic value and do not generate returns by themselves and are highly volatile.
Bitcoin Logo
The volatility of these currencies however calls for caution. Elon Musk, CEO of Tesla Motors was reported to have advised that investments in cryptocurrencies should be made from the place of comfort, and life savings should not be invested in cryptocurrencies due to its volatility.
Even with its clear disadvantages, market analysts have reiterated that investments and a highly supportive policy environment in Cryptocurrency and blockchain technology would boost Nigeria’s productivity.
In a world where the future is Artificial Intelligence (AI), Robotics, and Digital currencies, and the prediction that cryptocurrencies have a huge prospect, any forward-thinking government will not only prepare to be part of such, it will never cut off its citizens from it as well.
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REFERENCES:
- https://www.legit.ng/1421624-cryptocurrencies-why-nigeria-left-by-deyemi-saka.html
- https://nairametrics.com/2021/07/08/ecowas-voices-concerns-over-crypto-volatility/
- https://www.coindesk.com/crypto-booming-in-nigeria-despite-banking-ban
- https://nairametrics.com/2021/07/07/the-cryptocurrency-frenzy-a-call-for-caution/
