Islamic Finance

Commentary: Nigeria's central bank ban on cryptocurrency 'detrimental' for young people


Published 17 Feb,2021 via The Nation - The Central Bank of Nigeria (CBN) has announced a ban on cryptocurrency purchase and trading in the country.

According to the circular, the ban was to forestall illegal activities. The CBN also noted that cryptocurrencies do not have any intrinsic value and do not generate returns by themselves and are highly volatile.

Cryptocurrency is a digital currency built on blockchain technology designed to serve as a medium of exchange stored in a virtual wallet and regarded as the future of money as it is intended to solve the limitations of traditional paper money, including cross-border payments. Over 6,000 cryptocurrencies exist in the world, one of which is Bitcoin (BTC) being the most valuable crypto.

Cryptocurrency has many advantages. It is the alternative to cash and credit card. It is taking the digital world by storm. Many companies are accepting the payments through cryptocurrency these days. With the rise in the bitcoin value, many people are showing interest in investing in bitcoins. The cryptocurrency is backed by the blockchain technology that is having a positive impact on wallet.

When you are doing business or dealing with brokers or legal representatives, there is a lot of transaction fees that you must pay for every transaction. On top of it, there is a lot of paperwork, brokerage fee, commission and other things to be met. When you use cryptocurrency, it removes the need for middle man. The transaction would take place one to one on the secure network. The transactions would be transparent, and it becomes easier for you to engage in audit. There would be no more confusion on who is going to pay who. The parties involved in the transaction would know each other well.

The blockchain technology will manage the database that has the bitcoin transaction records. The decentralisation would involve only two parties in the transaction, i.e., the sender and receiver. You no more have to deal with any third party. There is no one to monitor what you are doing.

When you perform the transaction in cryptocurrency, you cannot reverse it. There will be a reliable encryption technique used throughout the cryptocurrency transaction process to protect from one from hackers.

The best part of using cryptocurrency is that every transaction you carry out with the recipient would be unique. You can get into terms negotiation in every deal. The information is exchanged based on the push concept. You can only share the information that you want to disclose to the recipient. The financial history will have ample privacy, and your identity would be protected.

Cryptocurrency has gained a considerable acceptance among youths in the country over the years. Bitcoin trading gained much fame in 2016 as a result of the bad economy of the country and non-availability of work for most youths. Nigeria is ranked the world’s second largest user of bitcoin by trading volume.That shows the rate at which our youths invest their time and resources in it.

Nigeria has been unable to tackle its increasing unemployment rate. In 2020, the frontier market witnessed a rise in its unemployment rate due to an ever-growing dependent population, reduction in the total output of goods and services, and the unprecedented COVID-19 pandemic, which had negative impacts on the economy and led to job loss for thousands of Nigerians.

Thus, cryptocurrency has helped to tackle the numerous challenges faced in international trade by many Nigerians, who don’t have a bank account. With the help of blockchain technology, many unemployed Nigerian youths now utilise the tools behind crypto and blockchain to generate income.

Cryptocurrency, like bitcoin, has also helped the unemployed facilitate small-scale international trade. Traders can sell products in exchange for Bitcoin and boycott traditional e-commerce systems, which often involves having to set up a merchant account with traditional banks, coupled with its attendant charges. It has also increased financial inclusion of individuals and companies by reducing the transaction fees and time of cross-border payments. This is beneficial for remittance payments, peer-to-peer lending, and international trade. Many youths enjoyed earning decently due to their exposure to the crypto, many were able to fend for themselves and even sponsor their education. Lots of new businesses and jobs were created.

We are in a digital age, hence we should not think as if we are in the Stone Age. Even some firms outside Nigeria are considering paying salaries in $BTC. So, why then should CBN ban it? Technology has taken over everything. Sadly, the action of the government is to stop young Nigerians who have been able to create wealth for themselves through crypto trading. In a country where the government cannot efficiently provide jobs for graduates/ youths, banning cryptocurrency seems detrimental. Cryptocurrency has given young people in Nigeria lots of opportunities and the population hope of better times to come where financial activities are concerned. Now, there’s the ability to send and receive funds globally, for whatever reason, while there’s also hope that cryptos such as bitcoin will provide a viable alternative to traditional banking services within the country.

With the ban, lots of youths will be left unemployed again adding to the rate of unemployment in the country. It is a retrogressive move by government.

Copyright © 2021 Vintage Press Limited. Provided by SyndiGate Media Inc. (Syndigate.info)


 

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Cryptocurrency
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Elizabeth Fadeyi