The digital economy has been experiencing a steady rise in crypto technology by young Nigerians and startups, to pay for goods and services.
Nigeria’s Information & communication sector (digital economy) grew by 15.09% in real terms in Q2 2020, compared to the 9.99% growth recorded in Q1 2020 and 9.01% in Q2 2019 amid the disruption caused to the financial markets by the pandemic.
In Q1 2020, Bitfxt – a fast-growing Nigerian crypto-trading company, raised $15 million Series A funding for the expansion of its operations, which created more jobs and investments in an economy in dire need of cash inflows.
The Lagos-based crypto startup permits consumers to buy and sell cryptos. Such macro shows how fast Nigerians are tapping into crypto technology, which in turn is boosting Nigeria’s economy.
Otatade Happy, a Paxful Peer, in an exclusive interview with Nairametrics, spoke on how the prevailing crypto evolution can further boost the Nigerian economy, with regards to payments and transactions.
“We know how difficult it is to send money from Nigeria to other countries but with crypto, payment can be made instantly without the hassles of queueing in the bank. I can also get money from abroad without stress.
“The fee to transfer crypto from one wallet to another is really small. Because of that, many people are adopting crypto in Nigeria and the older generation will soon accept it.”
Unsurprisingly, a significant number of young Nigerians have started utilizing cryptos, in a bid to avoid the numerous challenges faced with the traditional money transfer services, such as high costs and slow speed, amongst others.
The crypto evolution prevailing in Nigeria’s economy is already printing successful startups based on reports that a Nigerian-based cryptocurrency exchange startup, Yellow Card, raised $1.5million in seed capital from the popular American venture capital firm, Andreessen Horowitz, and a fast-growing crypto hedge fund, Polychain – to push its reach across Africa’s vibrant crypto market.
Raymond Asogwa, an Ambassador for Paxful and Power trader, spoke on the edge crypto brings to the Nigerian economy.
He said, “Crypto has given a lot of opportunities and a new niche that the Nigerian labor force can leverage on. The Nigerian tech industry is booming due to the exposure to blockchain technology.”
In an explanatory note to Nairametrics, Ekene Ojieh, Head of Public Relations and Corporate Strategy at Buffalo Chase – a crypto analytic firm, gave key insights on how some Nigerians use cryptocurrency for wealth preservation.
“Nigerians use bitcoin not just as a store of value but also as an investment. In the last 30days, bitcoin has made over 28%. Its accessibility enables anyone to send and receive bitcoin from any part of the world, unlike getting US dollars for international transactions.
“It is worthy to note that bitcoin is still a volatile asset. The upside of this is that, one can make a significant amount of profit in a short time frame,” said Ojieh.
Recently, a Nigerian female rights group known as Feminist Coalition, used the power of crypto to push for police reforms during the #EndSARS protests. The group used crypto technology to receive funds and provide the needed financial support for protesters in Lagos, Abuja, Port Harcourt, amongst others, as well as to foot the medical bills of some injured protesters.
The group resorted to accepting only Bitcoin donations – using BTC Pay, after an embargo was allegedly placed on its transactions by the Central Bank of Nigeria (CBN). BTC Pay is a free, secure, decentralized, and censorship-resistant platform.
A significant number of Nigerians and startups are quickly adapting to arguably the most disruptive technology ever invented – Crypto. Consequently, the increased usage of crypto is pushing Nigeria’s economic growth at a time when the COVID-19 pandemic has adversely affected Nigeria’s export earning product – Crude oil.
A few months ago, the Nigerian Securities and Exchange Commission (SEC), proposed a new set of rules aimed at regulating Crypto-tokens or Crypto-coin investments, when the character of an investment qualifies as securities transactions. This further highlights the importance of crypto to the Nigerian economy.
120 million XRP worth $76 million moved by a large entity
A large entity moved 119,999,980 XRP (75,551,782 USD) from an unknown wallet to Coinbase, a few hours ago.
The third most valuable crypto by market value, XRP has become the favourite of institutional investors lately, hinting that there may be more than meets the eyes.
Data, however, retrieved from Whale Alert revealed a large entity moved 119,999,980 XRP (75,551,782 USD) from an unknown wallet to Coinbase, a few hours ago.
— Whale Alert (@whale_alert) December 3, 2020
- Wealthy crypto investors seem to be upping their game last quarter of, 2020, as regards moving XRP – the third most valuable crypto by market value, as lately seen by Nairametrics.
- Many crypto experts anticipate the movements of such crypto are coming from major stakeholders of Ripple, on the bias some of these wallets contain a significant amount of XRP.
At the time of writing, XRP was trading at $0.628191 with a daily volume of $11 billion. XRP is up 1.16% in the last 24 hours, with a market capitalization of $28.5 billion. It has a circulating supply of 45,334,295,892 XRP coins and a maximum supply of 100,000,000,000 XRP coins.
What you should know: Ripple is a privately-held fintech company that provides a global payment solution via its patented payment network called Ripple Network (also known as RippleNet).
XRP still remains the only crypto gaining traction among global banks as Japan-based Mitsubishi UFJ Financial Group, with assets of more than USD 2.8 trillion, announced in November 2018 that, in cooperation with Ripple, it would provide an international money transfer service on the payment corridor from Japan to Brazil
Why are whales buying?
Economic historian, Barry Eichengreen, gave a detailed analysis of why cryptos should not just be considered for speculative reasons, as leading crypto assets have shown characteristics of being tangible assets.
“I don’t think that thinking about crypto as speculative investments, is really a long-term viable business model. Speculative investments have come and gone throughout history. Tulips came as a speculative investment and they went. Digital assets that provide actual tangible services like cross-border payments are the ones that are likely to have legs,” Eichengreen said.
Barry went on to explain why crypto has become the new digital gold.
He said, “Gold doesn’t really have any intrinsic value. People [believe] it will hold its value because other people value it. There is, from that point-of-view, a parallel with cryptocurrencies. People pay actual U.S. dollars for it because they think other people will value it and pay actual U.S. dollars for it.”
Explore Research Grade Data on the Nairametrics Research Website
Bitcoin is highly volatile, illiquid, supports digital Euro – European Central Bank
The ECB leader has acknowledged the gains of having blockchain technology in play but is critical about Bitcoin and other Cryptos.
European Central Bank (ECB) leader, Christine Lagarde, is leading the campaign for a digital euro but doesn’t see the flagship crypto, Bitcoin, and other cryptos as ideal for payment.
The ECB leader acknowledged the gains of having blockchain technology in play, but was critical about Bitcoin and other cryptos, particularly on the bias that it’s too volatile to be used in making payments.
“The main risk lies in relying purely on technology and the flawed concept of there being no identifiable issuer or claim. This also means that users cannot rely on crypto-assets maintaining a stable value: they are highly volatile, illiquid, speculative, and so do not fulfill all the functions of money,” Lagarde said.
In this COVID-19 era, Lagarde has declared her support for the digitalization of the Euro, elaborating deeper on what a digital euro could do, such as providing its citizens unrestricted access to money that is backed by a central bank, and allowing the Euro geopolitical area to maintain its monetary status quo.
“It could be important in a range of future scenarios, from a decline in the use of cash to pre-empting the uptake of foreign digital currencies in the euro area. Issuing a digital euro might become necessary to ensure both continued access to central bank money and monetary sovereignty.
“A properly designed digital euro would create synergies with the payments industry and enable the private sector to build new businesses based on digital euro-related services,” Lagarde added.
What you should know
- Some weeks back, Christine Lagarde gave a strong indication that the ECB could create its cryptocurrency within a few years, in what would be a systematical change to the euro zone’s financial system.
- Lagarde hinted that it could take two to four years before the project begins, as it would address concerns over privacy, money laundering, and the technology involved.
Bitcoin has caught our attention – BlackRock
Blackrock CEO, Larry Fink recently revealed the flagship crypto, Bitcoin is on his company’s radar
BlackRock CEO and leader of the world’s biggest asset management firm, Larry Fink, recently revealed that the flagship crypto is on his company’s radar amid the rapid gains recorded by Bitcoin this year alone.
Speaking recently at the Council on Foreign Relations alongside Mark Carney, former Governor of the Bank of England, Fink said, “Bitcoin has caught the attention and the imagination of many people. Still untested, pretty small relative to other markets.”
“Can it evolve into a global market? Possibly,” Fink added.
What you should know
- BlackRock is the world’s biggest asset manager with about $7.4 trillion in assets under management as of the end of Q4 2019.
- Its massive size allows it to do what no other asset management on planet earth can do.
Recall a few weeks ago, BlackRock top executive, Rick Rieder, gave reasons for his bias towards Bitcoin overtaking gold as the go-to store-of-wealth asset.
“Do I think it will take the place of gold to a large extent? Yeah, I do, because it’s so much more functional than passing a bar of gold around,” Rieder said.
Also, the BlackRock CIO of Fixed Income buttressed his bias on why Cryptos are here to stay, taking into account its role in payments among the world’s millennials:
“I think cryptocurrency is here to stay and I think it is durable and you’ve seen the central banks that have talked about digital currencies. I think digital currency and the receptivity, particularly millennials’ receptivity to technology and cryptocurrency is real. Digital payments systems are real, so I think Bitcoin is here to stay.”
However, the leading asset manager, BlackRock, doesn’t outrightly own any crypto yet. It is indirectly exposed to digital assets through MicroStrategy, a business intelligence company that has most of its savings in Bitcoin.
The world’s largest asset manager is the largest MicroStrategy shareholder, with a 15.2% stake in the firm.