Public perception of cryptocurrency in contemporary Nigerian society and elsewhere often suffers from the dangers of a single narrative. Media portrayals frequently conflate cryptocurrencies with Ponzi schemes and depict crypto traders as reckless gamblers or even fraudsters.
While cryptocurrency has faced challenges and concerns about scams, these perceptions are often fueled by half-truths and require a more nuanced approach. Besides, they stem from a crass denial of cryptocurrency’s potential for responsible use.
However, as recent developments like the Bitcoin ETF approval in the US and the growing institutional interest in digital assets highlight its potential for mainstream adoption, it is important to educate the Nigerian public about cryptocurrency and its potential for responsible adoption.
If you are interested in understanding the world of cryptocurrency in 2024, starting with Bitcoin makes perfect sense. Launched in 2009 during the global financial crisis, Bitcoin was the first successful experiment in “digital money,” invented by Satoshi Nakamoto, a mysterious figure whose identity has continued to fuel speculation.
Its key innovation: enabling individuals to directly exchange value (money) without relying on intermediaries like banks or governments. This peer-to-peer (P2P) technology sparked a revolution in financial thinking and spawned a whole new asset class – cryptocurrencies.
Bitcoin is the world’s first digital or cryptographic money, tamper-resistant, transparent and limited in supply. By creating Bitcoin, Satoshi was able to solve the double spend problem, which earlier attempts at creating digital money failed to achieve, and by doing so it became utterly impossible to respend bitcoin. Moreover, by capping the supply of Bitcoin at 21 million, Satoshi made its supply limited so that as the demand grows, the value increases.
Bitcoin became an instant success due to its underlying technology(Blockchain)and as people began to discover its monetary value. The success of Bitcoin gave birth to a new generation of digital money starting with Ethereum(ETHER). What soon followed was a wild rally to Bitcoin and other similar cryptocurrencies that were developed using the type of technology that enabled Satoshi Nakamoto to invent Bitcoin fifteen years ago.
As Bitcoin and cryptocurrencies grew in popularity and as more people came to recognise them as unregulated digital assets, all sorts of criminals in the financial world began to exploit them for nefarious purposes such as money laundering, phishing , blackmailing etc. This explains the origin of crypto crimes that have continued to dot the crypto landscape to this day.
Bitcoin and cryptocurrencies can be categorised as digital assets. As they continue to shape the financial world, countries like Nigeria stand to benefit from their legalisation in the following ways:
REVENUE
Bitcoin and cryptocurrencies can strengthen a country’s economy by creating a revenue generating base. This is especially true for developing economies that are looking for ways to grow their economies. Countries(ie India, South Africa , UK, etc)around the world have been developing a tax framework to regulate transactions on digital assets. Nigeria, for example, has millions of crypto traders and ranks as the largest crypto market in Africa. A good policy framework which allows crypto exchanges like Binance and KuCoin to operate in the country can open up access to fresh revenue from taxes paid into the government’s coffers.
FOREIGN CAPITAL
Recently, Nigeria’s Solid Minerals Development Funds signed a partnership agreement with a Dubai-based digital asset consulting company, Agile Dynamics Tech, to explore a potential tokenization of Nigeria’s tangible assets(ie mineral resources). In the cryptocurrency world, the tokenization of real world assets(RWA)is increasingly becoming a focal point, with countries like UAE, USA,UK etc, keying into it.
Tokenization is the process of breaking down the ownership of an asset into investable parts allowing millions of investors to own fractionalised assets. Tokenization can help a country like Nigeria to attract foreign capital. As the competition for FDI becomes more challenging, tokenization of real world assets has become a potential opportunity within the grasp of every country.
FINANCIAL INCLUSION
Bitcoin is a financial revolution despite its high level of volatility. In a world where there are billions of unbanked people, Bitcoin stands a testament to financial inclusion. With a phone and internet access, almost everyone can own and trade cryptocurrencies.
WRAPPING UP
Bitcoin is a volatile asset. Despite this shortcoming, it has outshone gold as world’s safest store of value. Bitcoin ETFs have landed and Wall Street investors like BlackRock, Grayscale, MicroStrategy,etc are pouring billions of dollars into it. In the nearest future , pension funds will have Bitcoin ETFs and millions of traditional investors will have access to invest in bitcoin in a regulated manner.
The challenges faced by Bitcoin still remain, adoption hurdle, volatility and criminals with access to it. But its enduring promise to bring about financial inclusion and autonomy is the fundamental rallying cry that continues to draw millions of people around the world to its fold.
