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Bright outlook as Bitcoin jumps over $1000 on first day of trading

Bitcoin accepted here

World leading digital currency, bitcoin opened the first day of trading in 2017 on a very positive note, at $1019 (about N330, 668.79 at the official rate as at Wednesday 4, 2016). It is the first time in three years it is reaching such high.

Bitcoin is used to move money across the world in record time, anonymously and it is free of control from any central bank or government which makes it very appealing for people who want to get away from capital controls.

Expectedly, several bitcoin evangelists are predicting a bumper harvest for the industry in 2017. For instance, Alejandro De La Torre, Business Development at BTC.com told BitcoinMagazine in an interview, “If the demonetization as we have seen in countries like India and Venezuela continues, I expect to see a blossoming of Bitcoin interest. Another trend I see emerging is Bitcoin security. Many users are realizing that their bitcoins are not safe in exchanges and are switching to wallets that have beefier security or using cold storage.”

Roger Ver a bitcoin a renowned thought leader in cryptocurrencies stated that 2017 will probably be the best year for the digital currency.

“We are already seeing all-time new highs in terms of market capitalization. All-time new highs in terms of price per bitcoin are likely just around the corner as well. Nothing is more powerful than an idea whose time has come, and clearly the separation of money and state is happening right now before our eyes. And with the former CEO of Barclays Bank being appointed to the board of Blockchain.info, I think 2017 will be the year we see traditional banks becoming deeply involved in bitcoin too,” Ver said.

There are different ways traditional banks can benefit from adopting bitcoin. In a 2014 article, global financial services firm UBS released a report titled ‘Bitcoins and Banks’ where it concluded that bitcoin is not just a ‘problematic currency’, but more of a technology that could bring widespread benefits if co-opted into traditional banking system.

UBS wrote “Setting aside its political agenda, we see Bitcoin as having some potential as a new transaction technology, where a bitcoin-like technology could provide a basis for a new shared payments and transfer system using existing currencies and securities. Such a system could reduce systemic costs, and provide faster, secure, transfers – particularly in the international arena.”

An indication that traditional banks may be looking into getting involved in the bitcoin party became evident in Nigeria when the Central Bank of Nigeria (CBN) teamed up with the Nigeria Deposit Insurance Commission (NDIC) to set up a special committee to study bitcoin and the entire blockchain industry in December 2016.

While explaining the position of the two agencies, Umaru Ibrahim, managing director of NDIC stated “A lot of Nigerians have already started patronizing digital currency. Bitcoin has started to creep in and nobody can stop it in different economies of the world. Some central banks adopted the technology and are doing everything possible to develop new products. Owners of cryptocurrency do not need a bank, especially not a central bank.”

Among other things, the Bitcoin committee is expected to come up with a regulatory proposition that will ensure seamless operation of the digital currency. When that committee concludes its study sometime this year and it is adopted, it is likely that big players in the financial services industry in Nigeria will feel more confident in adopting bitcoin at some level of their operations.

The major fear of some stakeholders in the financial services industry is the high volatility of the digital currency. The last time bitcoin surged beyond the $1000 mark was in 2013 and was majorly because users and speculators rushed to invest in a currency that was supposedly about to disrupt the industry. The value came crashing down to $400 a few weeks later following a hack on the Tokyo-based Mt Gox bitcoin exchange.

The current jump in value is believed to be driven by increased demand in China due to the drop of 7 percent in value of the Yuan representing the Chinese currency’s weakest annual performance in 20 years. Although the current surge is still some way off the all-time high of $1,163 it reached in 2013, the main question on many people’s minds, is how long until the next crash?