Why Nigeria needs a regulatory framework for blockchain technology
Technology experts and industry stakeholders have in the last few years clamored for acceptable structure and regulation blockchain and digital currency, which they say is more than necessary in today’s fourth industrial revolution that involves all things digital.
Several discussions have been raised about the need for government to create a regulatory framework for digital currency, leverage the digital dynamism of blockchain technology to manage public funds and to spur a wave of startups in the digital currency ecosystem.
Blockchain is a continuously growing list of records called blocks which are linked and secured using cryptography. By design, blockchains are inherently resistant to modification of data which makes it arguably the most secure way of handling money. The distributed ledger technology can record transactions between two parties efficiently and in a verifiable and permanent way.
However, in Nigeria, our government seems to be making no effort to incorporate blockchain applications to improve the economy. It is highly unregulated and the Central Bank of Nigeria (CBN) warned Nigerians to be wary of investments in cryptoccurrencies which are not accepted as legal tender in the country.
Speaking a while ago at the first blockchain conference held in Lagos, Chimezie Chuta, coordinator of blockchain Nigeria user group, said that the revolutionary technology is being explored and exploited in developed nations around the world.
“What makes blockchain better to use is that no one can alter the content and if any one does, such content will not have consensus with the other platforms existing in the network. More so, if one of the nodes goes down it does not affect everything, as other nodes that have the data will still be on.
“We already know the challenges being faced in Nigeria, and this technology is one tool that will greatly strengthen our financial system and help or government to control funds.
“Blockchain transports so many other applications on it and can be applied in document verification, state services, land registry, educational sector, and best in financial system because it cuts out the middle men in any service” Chuta said.
This emerging technology holds pivotal potential and offers transformational solutions to numerous world problems. With the World Economic Forum recently asserting that blockchain solutions could add a staggering $1 trillion dollars to the world economy within the next 10 years (2028). Nigeria therefore needs to pay more attention to this emerging technology to transform and grow the nation’s economy.
Stakeholders have called on the Nigerian government to come up with policy statements, create a regulatory agency, and have a clear road map for blockchain and digital currencies; so that startups will be clear on laws in the handling of such businesses.
“A regulatory framework to ensure checks and balances needs to be put in place. We need to know the people in these businesses. Do they have the capital to protect the users? They may not be able to regulate bitcoin itself but they can regulate its use and that is what we expect government to do. Government is looking for how to create employment, and the cryptocurrency industry is an industry that can employ millions of Nigerians because it has many off shoots” Chuta said.
Musa Itopa Jimoh, head, payments system policy and oversight of Central Bank on Nigeria (CBN) said; “Nigeria’s position is very clear and we cannot stop the tide of waves generated by the Blockchain technology and its derivatives.”
“However, the CBN has the responsibility of ensuring price and financial system stability, the central bank has kick started several initiatives and research works to identify the various use cases of blockchain technology including the issuance of digital currency using the blockchain technology,” Jimoh added.
Blockchain technology is an innovation that has been around since the 1970, while being applied in the fields of asymmetric cryptography for military grade un-hack able data storage, and distributed databases not reliant on a single computer. It has been successfully implemented as the architecture of distributed ledger system behind Bitcoin, the first mainstream cryptocurrency.
Jumoke Akiyode Lawanson