Should Nigerians Take Crypto Seriously?
Let me begin with a disclaimer: this article is not a piece of investment advice. A few years ago, if you asked me about cryptocurrency or blockchain, I would have no answer, and maybe I would have been a little irritated by the question. “Do you think I have time for the nonsense these boys are disturbing the internet with?”. But somehow, in the last few months, the world has turned upside down. This phenomenon has grown on us. Let’s begin with the interesting part. In 2009, the naira exchanged for N150 to a dollar. These were dark days in Nigeria. Boko Haram’s brutality soared in the north, while militants wreaked havoc in the South, Niger-Delta to be specific. It’s was a grim situation for Nigeria’s sick President. Incidentally, that same year, Bitcoin, the first cryptocurrency, was created. It traded at $0.0008 for 1 BTC. In the last 12 years, so much changed. One more than soared, the other dipped. So let’s compare how this little-known currency created by an anonymous programmer faired compared to the naira, backed by the Nigerian government. check images Our currency is depreciating fast. From 2009 until today, the naira has depreciated by over 333% against the dollar. In contrast, Bitcoin has appreciated by over 8,900,000% within the same time frame. If you compare these two and project with rationality, where would you stake your bet? In April 2021, Paxful, a global cryptocurrency trading platform, announced that Nigerians were its second-biggest traders only after the US. Nigerians had traded over $1.5 billion. Shocking! Our financial policy is questionable. Do you remember when the CBN asked manufacturers to submit their dollar proceeds to banks? The goal was to stabilize our exchange rate and close the gap between CBN’s rate and the black market. However, the challenge was that manufacturers bought their raw materials with dollars sourced from the black market at N499 to N503 per $1. In comparison, the CBN was exchanging at N410 — N420 per $1. This meant manufacturers would lose between N7.9 to N9.3 million for every $100,000 transaction made. As a result of this, there was a scarcity of FOREX for most businesses. For example, Erisco Foods threatened to shut down its operations in Nigeria and sack 1500 employees because the CBN refused to give them FOREX for importation. But what if this could have been solved some other way? Since crypto works on decentralized blockchain technology, there’s nothing like an exchange rate between tokens of the same currency. For example, 1 BTC in Nigeria is 1 BTC anywhere else in the world. Because of this, businesses and individuals who have crypto have access to the world market. Thankfully, Big organizations in the US like Amazon and Microsoft now accept payments in crypto. In a few years, many more businesses will join in. Why is adoption sluggish in Nigeria? Culture. Unfortunately, we are not designed to seek new ways to do things. This is ingrained into the Nigerian tradition. Parents still go back home when they retire to die. Which means they never really embraced the new place they explored in their youth as home. This culture runs so deep that we brought it to the internet. As a result, crypto has been banned on most forums and websites. This is because we classed it like we class all things men fear: illegal. But then a group of people, who had no other choice, who had to store large amounts of money without “triggering the financial system,” became our early adopters and became stupid rich off it. I’ll end with a bit on crypto in layman language. Cryptocurrency is essentially a digital currency based on a decentralized system by blockchain technology. Don’t worry; I’ll break it down. A decentralized system means several computers have a copy of the same data. For example, if three friends make a copy of the same answers to an assignment, the marker will know that three of them copied each other. He will either decide to punish three of them or find out who copied who. The bottom line is that he can tell they’re from the same source. Now, that is how crypto works. In this case, several computers have to agree that they have the exact copy of data to make it valuable. If this data doesn’t match, then there’s no crypto. If you still don’t understand, google it. After two or three articles, it should be very clear. When governments begin to create regulations around something, best believe that thing is going nowhere. I hope this helps us ask ourselves, should we ignore crypto? *Blockchain technology is essentially a system to record information or data that makes it impossible to change, erase or cheat the system.
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