Abdoulaye Diack, a Chief Technology Officer at Rescue Technologies Limited recently shared his experience with his first bitcoin payment in Nigeria. While he did not state the amount transferred, he noted that he was charged 0.01298 mBTc as a fee. At current exchange rates, that equates to about 0.14USD
This is quite interesting as Nigerian authorities have raised doubts about the validity and authenticity of cryptocurrencies. The Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele has likened dealing with cryptocurrencies to gambling. The Senate has also advised Nigerians to be cautious regarding cryptocurrencies. It has also mandated its committee on Banking and Finance to investigate the viability of bitcoin and possible regulation.
Global attention has been focused in the past 1 year on cryptocurrencies especially bitcoin. The price of bitcoin rose by over 100% to close 2017 at $15,000. 2018 has however been a turbulent year for cryptocurrency markets, with bitcoin falling by over 40% in January below the $10,000 mark. It has since rebounded, but price recovery remains weak.
Why then are Nigerian companies using them?
Compared to other means of transferring funds, cryptocurrency transactions are much faster. As seen in Diack’s transaction, they also cut off the bureaucracy that goes with money transfers and are a much cheaper in terms of fees. Transaction charges are also fixed, in terms of transaction size. Most exchanges typically charge 0.01 BTC per transfer. Others using their in-house token charge significantly less.
Many Nigerian businesses are dependent on foreign business partners either for software or raw materials. The foreign exchange crisis of 2016 and late 2017 led to difficulties in accessing foreign exchange due to the CBN’s supply management measures.
Unlike regular bank transfers that are easily reversible, cryptocurrency transfers can not be reversed.
Banks still retain a role in such transactions as they are the primary means of converting cryptocurrencies into fiat or regular money. End to end crypcurrency transactions are still a rarity.