Forex Crisis: Nigerians Abandon Dollar For Bitcoins

By Ikenga Chronicles January 5, 2017

The shortage of foreign exchange in the country is forcing Nigerians to abandon dollar for Bitcoins, New Telegraph reports.

Bitcoin, invented in 2008 is a digital crypto-currency that is generated by harnessing the processing power of computers. It is not backed by any government or Central Bank

The report indicates that transactions in the digital currency has recorded a significant rise in recent time due to the scarcity of dollar.

The digital currency can be used for transactions, such as the purchase of jewellery, payment of bills and the transfer of money abroad (remittances) at under N200.

It was affirmed by sources that the sudden use of Bitcoins in Nigeria has been driven mainly by persistent Forex shortage in the system, as users of the digital currency appear to see in it a credible alternative to the scarce dollar.

A financial analyst, Mr. Patrick Okoli, said: “Users believe that Bitcoin has more value than the naira. This is because they believe the digital currency is much more stable and its exchange rate is unlikely to crash in value in the long term, unlike users of the naira who could see the local currency crash whenever the Central Bank of Nigeria (CBN) decides to devalue it.”

It will be recalled that the Managing Director of the Nigeria Deposit Insurance Corporation (NDIC), Alhaji Umaru Ibrahim, disclosed recently that the Corporation and the Central Bank of Nigeria (CBN) have set up a committee to look into the possibility of legalising the use of the digital currency–the Bitcoin–for transactions.

His words “On our part, we have constituted a committee together with the Central Bank to have an in depth study of this phenomenal Bitcoin. We will look at its advantages and disadvantages, what it means for the payment system and what it means for the safety and security of customers.”

“We will also look at what it means for money laundering, anti-corruption, crime and measurement of money/near money instruments for the economy.”

However, analysts point out that more banks are currently adopting the critical technology behind the Bitcoin – block-chain.

According to a recent IBM report entitled: “Leading the pack in block-chain banking: Trailblazers set the pace,” which surveyed 200 global banks, 15 per cent of banks worldwide are expected to implement block-chain, which is a ledger of transactions updated in real time by various institutions, by the end of this year.

Banks expect the use of block-chain technology, which would allow institutions themselves to update data in real-time, to lower costs by cutting out the middleman and speed up transactions since banks would cut down on time spent reconciling disparate data, the report stated.

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