Bitcoin may not be as widespread yet in the country, but Nigerians and some businesses are already taking advantage of the opportunities it offers in money transfers in and outside the country. As at October, the worth of transactions in Nigeria involving bitcoins hit N363 million and grew by 50 percent in the first week of November to N154 million.
Bitcoin is one proposition that is changing the rules of financial transaction and redefining what we know as money according to Tim Akinbo, consultant at Tanjalo Software Limited in an interview with BusinessDay.
“Bitcoin has become the alternative for people seeking an option to preserve their savings from further currency devaluation,” Akinbo said.
Bitcoin refers to a type of digital currency (cryptocurrency) in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank. Originally, it was designed to cut out middlemen financial institutions (banks and credit companies) charged with maintaining financial transaction ledgers.
According to Akinbo “When you send money to someone, your bank is keeping a ledger of how much you have left and this is done so that you cannot send the same amount of money to another person.
“So we have had electronic currencies before but what they all had in common was a central ledger. Paypal, has a central ledger, VISA, mastercard, the central bank, first bank, zenith bank, they all have ledgers. And this ledger keeps track of who has what and who sent what.
“Let us say what these cryptocurrencies have done for the first time is to remove the need for a central party to maintain this ledger of transactions. Rather than having a bank as the trusted entity; we devise a way to have everybody own this ledger and define rules but which currency units will be created and how entries in this ledger will be validated.”
Some experts refer to a system where individuals and not the central bank have the power to decide how their money is moved or utilized as the “democratization of finance”.
Just as individuals are benefiting from bitcoin, it also serves many benefits to any business owner according to blogger Crypto.press in a tweet to BusinessDay.
“It can offer many business utility and also make many business processes much more efficient, especially in the long term. While most people utilize it as a store of value currently, that is really the tip of the iceberg. Combined with automation business operations can be entirely reimagined eliminating huge costs in overhead.”
There are threats that should be considered remarked Akinbo. “It is disruptive so I can understand how this can be scary. Some people are using the cryptocurrency to invest in ponzi schemes and scams (posed as person-to-person donations or investments) like MMM, Zarfund etc.
“Bitcoin cannot be regulated but companies and onramps can be. What that means is, you can get bitcoin by either buying it, working for it, or being paid in it. The major way people acquire bitcoin is by buying it. Hence there needs to be an exchange. This exchange happens mostly through a company providing the exchange and because they deal with the current financial system, they could be regulated,” Akinbo said.
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