How Cryptocurrency Trading Impacts the Nigerian economy

The importance of cryptocurrencies has, for a long time, been contested and deliberated. Now, they have been revealed as financial tools that can be accessible and useful to more than only intransigent enthusiasts. Cryptocurrency trading has also, remarkably albeit steadily, started to impact the Nigerian economy.

The Bitcoin rise in 2017 from $900 in January to about $20,000 by the end of the year proved digital currencies to be highly volatile, compelling several regulatory bodies — the Central Bank of Nigeria included — to strongly advise against massive investments in the crypto market.

Interestingly, in 2021, the global economy is now embracing cryptocurrency as not only a medium of exchange but also, a source of risk and store of value, receiving validations from the billionaires of the world. Elon Musk recently purchased $1.5bn worth of Bitcoin, and MasterCard announced its interest in the facilitation of cryptocurrency transactions in 2021.

These announcements resulted in the price of Bitcoin recently skyrocketing to a record high of $51,000, before falling to $35,000. In Nigeria, the crypto market grew so much that the volume of Bitcoin traded every month is estimated at $200million according to one of Nigeria’s largest cryptocurrency exchanges — Buy Coins.

So, it is clear that cryptocurrencies have the potential to enable social and economic growth throughout the world, including in Nigeria, by offering easier access to capital and financial services.

Cryptocurrencies and Bitcoin trading in particular have a highly utilitarian quality that has begun to interfere with the way the traditional financial system works.

1. A Significant Rise in Economic Activities

Over time, cryptocurrencies have become so popular that there is now an entire industry built around cryptocurrencies. These industries are held by institutions devoted to overseeing every digital coin exchange taking place throughout the world. The growth rate of the cryptocurrency industry is undeniably remarkable as confirmed by early ‘believers’ that became financially buoyant with more opportunities for financial growth.

Other than these people that gave Bitcoin a chance back then, many people and companies have chosen to develop and flourish by adopting cryptocurrency trading as their source of income. Though the Central Bank of Nigeria has placed a ban on cryptocurrency trading, there is no denying the fact that it still has a significant impact on the Nigerian economy.

2. Low Costs of Transaction

Cryptocurrencies are digital currencies and as such, do not need a physical building to exist. Because of this, the costs associated with their transactions are minimal. With no need for employee wages, utility bills, or rent, having to save on all these fronts results in low transaction fees.

This unequivocally encourages more people to trust this new venture and start transacting, allowing for the Nigerian economy to be more closely impacted. Depending on the broker you choose, you can trade with no minimum deposit requirements.

3. Complete Transparency of Transactions

Blockchain and cryptocurrency transactions are carried out digitally and automatically. So, they are all easily trackable in a distributed ledger. Also, it cannot be altered by either people or companies, greatly reducing the chances of fraud and corruption.

Nigerians have adopted this method of financial transactions game to boost their economic and social prospects. Towards the end of 2020, a Nigerian female rights group — Feminist Coalition — utilized the security of crypto to push for police reforms during the #EndSARS protests.

The group used cryptocurrency technology to receive funds and provide the needed financial and medical support for protesters all over Nigeria and the world at large.

This way, citizens could keep track of where the funds will be and ensure maximum transparency.

4. Eliminates the Need for Third-Parties

Fundamentally, Bitcoin was designed to allow peer-to-peer electronic transactions between partners without the intervention of any middlemen. This totally eliminates the need for any intermediary, or a go-between, unlike the fiat currency. Transactions are confirmed in a decentralized manner.

This has almost rendered the banking institutions redundant, as it threatens the need for their service. Removing the need for multiple hands during transactions has made crypto trading much quicker.

5. Boosts More Overseas Transactions

It is unarguable that overseas transactions drive economic growth in developing economies including Nigeria. With the ease of these transactions, many people around the world working overseas regularly send money to their families and loved ones back home.

Currently, this transfer has to be managed by intermediaries, including financial institutions or other money transfer services that charge exorbitant costs for transaction fees. Moreover, the transaction process is so slow taking several days before the receiving party gets access to the funds. This is where crypto trading comes in to affect the normal in the Nigerian economy. With a digital wallet, transactions can be carried out anywhere in the world.

The last quarter of 2020, saw an average of 287,492 confirmed Bitcoin transactions worldwide. This goes to prove that people have come to appreciate the ease of transaction as it’s quite fast, transparent, confidential, and secure. Besides, the transaction fees are more affordable than those of the regular payment systems.

6. Lessens the Reliance on Fiat Money

Since it is decentralized, cryptocurrency is free from any impact of the Nigerian economic and political issues that could affect traditional currencies. This is where Bitcoin comes in as a digital currency that can be a substitute for authorized or fiat money.

In recent times, customers have come to rely more on digital transfer because of its convenience, security, and speed. It is also now seen as a convenient means to pay for products and services. This would surely reduce the reliance on traditional or authorized money.

People and companies who have enjoyed the level of convenience cryptocurrency offers have come to see their virtual cash as being on the same level of security as authorized money.

7. Removes Barriers to Entry in New Market

Bitcoin was built as a global decentralized transaction network that eliminates the need for any centralized institutions for currency issuance and settlement. So, it created a new kind of market and opportunities where no authority or individual has control over the money market.

This way, instead of trying to convince the venture capitalists, banks, and other financial institutions for your potential project, you can circumvent the regulations and authority through Initial Coin Offerings (ICO). With ICO, startups and small businesses in Nigeria can sell some of their coins to get their business started.

This is what happens in ICO crowdfunding. The investors purchase cryptocurrency coins representing shares in the project, akin to how the stock market operates. This way, the shares stand the chance of seeing an increase in worth if the company does well. This is called crypto equity crowdfunding.

This new time of crowdfunding with cryptocurrency is vital in helping inventors and entrepreneurs have a chance, and it creates a sustainable impact on the Nigerian economy.

Bottomline

Cryptocurrency has, time and again, proved that it is here to stay. A remarkable number of Nigerians and startups are quickly adapting to one of the most disruptive technology ever invented — Crypto.

Therefore, the increased usage of cryptocurrencies has undoubtedly continued to push Nigeria’s economic growth especially now when the COVID-19 pandemic has severely affected Nigeria’s economy.

Trade what you understand with Bekonta.

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Bekonta is an automated platform that enables you to Buy or Sell your Bitcoin (BTC), Ethereum (ETH) and Tron (TRX) in seconds.

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Bekonta

Bekonta

Bekonta is an automated platform that enables you to Buy or Sell your Bitcoin (BTC), Ethereum (ETH) and Tron (TRX) in seconds.

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