Around the year 2009, a mysterious digital currency was created by someone with the identity of Satoshi Nakamoto and by 2016 it became globally known. In late 2017 its value skyrocketed to $19,000+, more valuable than Gold and Silver combined and in Nigeria it became the talk of the day.
Bitcoin has become one of the best things that have happen to the Financial Technology (FinTech) industry, that so many firms in Nigeria are getting themselves involved in them. Because of how easy it is to make transactions –you can pay for products in Microsoft, Jefferson’s store and even Bloomberg without the intervention of banks and presently you can transfer funds to anyone using bitcoin.
In today’s article, we will be talking about Bitcoin being the Future Digital Money in Nigeria or are people just way over there head concerning bitcoin or is it a bubble waiting to burst –that will be our major concern in this article.
Before we proceed, we will explain a little bit about bitcoin for those who have no idea what it means.
What is Bitcoin?
Bitcoin is a digital currency, which means there is no physical representation of it –no note, print or coin. It is decentralized that is it is not controlled by any government body, bank or authority; users are anonymous and cannot be tracked.
How Are Bitcoin Made?
Since bitcoin is not minted or printed, how is it then made? Good question but Bitcoins are created through a process known as mining and can be exchanged for other currencies, products or services.
Each transaction that is made is recorded into the blockchain. Consider the blockchain to be some sort of a public ledger that records bitcoin transactions wordwide.
Miners keep the blockchain consistent, complete, and irreversible by repeatedly grouping newly broadcast transactions into a block hence the name “blockchain” and then are paid while creating new bitcoin.
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Advantages of Bitcoin
One of the reasons why bitcoin is gaining ground in the FinTech industry is because of the advantages it has over fiat currency and I will discuss a little of these:
This is one of the main reasons why most Nigerians transact using this medium, individuals want to be totally anonymous with their details and especially keep their financial details a secret and this is what bitcoin offers – a totally private mode of monetary transfer.
Let us take for example; sending money from Nigeria to China or United Kingdom, I would need to pass through various stresses and time-consuming task but with bitcoin that international transaction can be done in less than 15 minutes and will be received within a shorter time span.
Low Cost of Transaction
I do not have to worry amount paying 3% or 10% of the money I want to transfer as transaction fee through Western Union or Bank Transfer, I can easily do that by paying some cents or dollars and that is it.
Disadvantages of Bitcoin
Though those are some of the advantages, there are also some disadvantages, which include:
Lack of Understanding
The ugly fact is that a huge percentage of Nigerians do not know how this “bitcoin” work or even have access to it.
This is the main disadvantage and why many people fear it. The bitcoin exchange is open 24/7 and never sleeps unlike stocks and forex because of this, it fluctuate a lot and you might buy high only for the price to drop drastically and you might not get the exact value of what you wanted and nothing makes a Nigerian more angry than not getting the exact price of what he paid for.
Unlike banks and other financial institutions that are regulated, bitcoin is not as such, the Central Bank of Nigeria and Federal Government has warned against people trading it or investing in it.
We have said the advantages and disadvantages of this “digital money”. Now that brings us to the question “Is Bitcoin the Future Digital Money in Nigeria”
Is Bitcoin the Future Digital Money in Nigeria?
It is no doubt that more people and other financial institutions are beginning to accept and use this digit money but there are some challenges it faces such as it can be used to fund illegal activities, money laundry etc.
One of the reasons why many people and especially government agencies such as Nigeria Deposit Insurance Corporation (NDIC) are not buying the idea of making the bitcoin “a legal tender in Nigeria” is the total number of bitcoin that can ever be mined.
There are 21 million bitcoins available and we have currently mined 16 million, which are in circulation. This poses threat to both miners and users. What will happen after the all bitcoin has been mined? It then means that the algorithm of how bitcoin operate will be changed to make more production of bitcoin and this cannot be done without having a central governing body, which will see that the supply and demand is kept in check along with its activities.
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To make bitcoin have the trust of Nigerians it has to be “somehow regulated” in the sense that rules and regulation will be spelt out to govern the usage of this coin which will make the National House of Assembly in Nigeria to pass a new bill into law on how to regulate this bitcoin in Nigeria and also the Central Bank of Nigeria has to see that all the transactions are in accordance to the law.
There have been other types of coins which has surfaced ever since the creation of bitcoin such as Ethereum, Ripples, Litecoin, Dash etc. However, no country has made it (bitcoin) or any of the coins a “legal tender” that’s a more good reason why Nigeria won’t do the same.
I believe that bitcoin will soon replace the fiat currencies if and only if it is redesigned to meet conditions such as being regulated by a central body and being taxable. The government will need to tax users which will force the anonymity of bitcoin has to be removed and that will automatically solve the problem of using bitcoin being used for illegal activities thus, bring bitcoin into the light.
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