Cryptocurrency: Not Too Late To Make Hay While The Sun Is Shining

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Written By Rume Ophi

Some few days ago, the Daily Independent, one of Nigeria’s most prominent national daily newspapers carried this screaming headline on its front page: “Starved of Dollars, Investors Embrace Cryptocurrencies.”

Being the major headline for the day for the print medium with a reputable online presence, this comes as a surprise to many I will like to refer to as ‘Crypto Skeptics.’

In part, the report noted: “Following the dwindling supply of dollars, which at the weekend sold N500/$ at the black market, some business owners have resorted to cryptocurrencies to buy the imports that are the bedrock Nigeria’s economy.

With the price of oil, the country’s main export, depressed and foreign exchange reserves dropping, the central bank is holding on to scarce foreign currencies in its coffers in order to shore up the naira.”

The report noted that naira has been experiencing a steady fall for many weeks now. “For instance, by 1.05 percent on Tuesday, August 18, 2020, to a low of N480 to the dollar on the black market, while it was N500 by the weekend. Similarly, the Pound Sterling exchanged for N610 and the Euro traded for N550.

Understandably, Nigeria’s weakening naira currency, as well as the shortage of U.S. dollars, are forcing businesses to switch to bitcoin as the means of settling payments for international transactions. Nigerian businesses need the American currency to buy new supplies, as well as to order essential equipment from abroad. However, formal sources of foreign currency like banks are failing to meet this demand.

The implication for the above is that cryptocurrencies have gained prominence among Nigerians, given their use as a medium for settling cross border payments and for remittances. In fact, BusinessDay Newspaper quoted me on this in an article on this subject matter they published. The extract of the quote was taken from an interview I had earlier granted the medium; which I find relevant to this article. “They are using it (cryptocurrency) to buy stuff abroad, especially the people doing business in China because it is lucrative there even though the Chinese government is clamping down on transactions using cryptocurrencies. All you need to do is have a VPN, you are on the internet, you can do your transaction. Bitcoin is not censored so it is difficult for them to control.”

The number of people spending bitcoin now in Nigeria is increasing like wildfire. I get all sorts of questions these days like ‘How can I start?’ ‘How can I trade?’ The global pandemic and the associated restrictions on movement appear to have spurred on a new wave of demand for bitcoin. More Nigerians are exploring cryptocurrencies as shown by the number cryptocurrency wallets downloaded. For instance, data from Local.Bitcoin.com shows that Nigeria overtook the United States as the country with the most downloads of the Bitcoin.com Wallet in recent times. Out of the 18,613 wallets downloaded between 16 and 10 August, 3,473 were from Nigeria which shows the country is well ahead of the 2,802 from the United States. India is a distant third with a total of 1,420 downloads during the same period. Also, data from Usefultulips also shows that Nigeria is one of the countries with high peer to peer bitcoin traded volumes in the world. According to reports, Nigeria is also the country leading the African continent in terms of peer-to-peer traded bitcoin volumes. According to this report, Nigeria recorded trades valued at $34.4 million in the second quarter of 2020.

Significantly, around the world, the acceptance and utilisation of blockchain technology and its underlying cryptocurrencies has become more imperative. With the surge in the number of bitcoin (BTC) and altcoin users, it could be presumed that people are now more aware of the possibility of attaining financial autonomy.

It is imperative like I love to emphasis across platforms I speak and write, that more Nigerians need to jump on the cryptocurrency bandwagon before it is too late. Across the world, countries, corporations, businesses and individuals are investing heavily into this. And why not? The price of Bitcoin (BTC) has increased by nearly 30% since late June, from $8,905 to just under $11,500 as of press time.

Whether Bitcoin remains in the $10,000-513,000 range for an extended period remains uncertain. In the past three years, BTC has tended to consolidate throughout September to October and rally during mid-November. Considering the activation of the block reward halving on May 11, the probability of an uptrend in November to December remains high. Fading dollar value benefits Bitcoin. A persistent narrative around the long-term prosperity of Bitcoin is the decline of the United States dollar in recent months, primarily due to the pandemic and the U.S. economy

So where does bitcoin sit in the economic cycle? during periods of economic uncertainty and dollar weakness, #Bitcoin is likely to benefit in the same way as gold. If bitcoin’s financialization continues, it will be unable to remain insulated from the financial system. Whether the falling momentum of the dollar has already had its full effect on the price of Bitcoin remains unclear. The U.S. dollar has already dropped to a two-year low, and in the near term, analysts anticipate a dollar recovery. But two variables that could cause the dollar to drop further are low interest rates and the European Union’s sizable stimulus package. The euro has outperformed the dollar in recent weeks, as investors found the EU’s 750 billion-euro recovery fund compelling.

All the above indicates that since the naira is dependent on the availability to thrive and the dollar also has its challenges at the moment, bitcoin will continue to rise. This implies that it is not yet late to make hay while the sun shines. As an analyst in this field, I can safely advise for investment into this space as we are set for a bull run that will not be forgotten in a hurry.

*_Ophi Rume is a Blockchain Consultant, Blockchain & Fintech Writer, OTC Merchant, BTC Trader, and a Crypto Teacher. He is a Founder of the Crypto Preacher Fellowship with over a thousand member. Known as the Crypto Preacher, Rume has spoken at many conferences across Nigeria and Africa on digital currency, bitcoin and blockchain._*

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