THE BITCOIN AND BLOCKCHAIN REVOLUTION

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Nigeria needs to pay attention to digital currency, writes Gaius Chibueze

At the point of economic bankruptcy, Venezuela’s best-surviving bet was to turn to digital currency. The country just like Nigeria has oil and over depended on it.

Before the Venezuelan government rolled out their own digital currency called the Petro, many smart Venezuelans already turned to digital currency like Bitcoin to safeguard their savings and wealth before their own country currency called Bolivar became totally worthless.

In UAE this year, we witnessed the collaboration between the UAE and the Kingdom of Saudi Arabia. Both countries signed an agreement to test run cryptocurrency and blockchain for money transactions between the two countries. The digital currency, called Aber, is being tried to see whether it can be leveraged on to reduce remittance costs.

According to Bloomberg,the people’s Bank of China is close to issuing its own cryptocurrency after the banks’ researchers have been working since last year to develop digital currency system for the count

In 2017, the cryptocurrency market surpassed the $100billion barrier. The same year, the price of bitcoin, the flagship of this extremely popular digital or virtual currency rose by 1,318 percent compared to just 15 -30 percent for most major equity indexes. And currently, we have a market capitalization that’s close to $300 billion. While price overtime fluctuates with all the speculations around Bitcoin and cryptocurrency, we must not base the impact and growth of this nascent industry on price alone. The main future and biggest impact lie in the technology underpinning this innovation called blockchain.

In Africa, cryptocurrency is hugely misunderstood and still in its infancy. However, countries such as Kenya has embraced it wholeheartedly while Nigeria and indeed many countries on the continent have maintained a lukewarm attitude to it and in the process turned its back on its huge potential. Recently, Kenya’s M -Pesa system, its mobile phone transfer, and micro-financing service has a bitcoin device which has made it possible for one in three Kenyans to own a bitcoin wallet. This reality has positive repercussions in the present and the future. Unfortunately, this giant leap is in sharp contrast with the attitude and policy thrust of Nigeria’s central government so far. As a matter of fact, the relevant authorities in Nigeria view cryptocurrency with suspicion and in extreme cases equate it with pyramid schemes. As a result, bitcoin traders have been denigrated, harassed, intimidated and erroneously labeled as scammers.

The result is that while some countries such as Kenya have positioned themselves to reap from the enormous gains of the cryptocurrency revolution, Nigeria has so far walked away from this unfolding new economic order. It would be a huge mistake of epic proportions for this faulty policy to take a foothold in Nigeria.

In simple term, cryptocurrency can be defined as an alternative form of payment to cash, credit cards, and cheques. Driven by blockchain technology, this virtual account system is an ingenious system with huge benefits and advantages. According to Don and Alex Tapscott, authors of Blockchain Revolution (2016), ‘ the blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value ‘”. It is the recording keeping technology behind cryptocurrencies such as bitcoin, ethereum, XRP, bitcoin cash, and litecoin. The power of blockchain technology lies in the fact that it is a series of an immutable record of data managed by a cluster of computers not owned by a single entity. Each of these blocks of data is secured and bound to each other using cryptographic principles (i.e. chain). Nations interested in a corrupt proof system especially in Nigeria and developing countries of the third world with formidable challenges of transparency and corruption should look no further than the blockchain technology. This is because it has the capacity to fight and stamp out corruption through its inbuilt mechanism.

Worthy of note is the fact that it has no central authority, so in effect, transactions can be monitored by all. Since it is a shared and immutable ledger, the information in it is open for everyone to see. What we are dealing with are blocks of data which by its very nature is transparent with every involved dealer accountable for their actions. Apart from the cost of building the required infrastructure, it carries no transaction cost. Using the blockchain technology, information is passed from A-B in a fully automated safe manner. Once a party initiates the process by creating a block, this block is verified by thousands or even millions of computers distributed around the internet. This verified chain creates not just a unique record but a unique record with a unique history. Fraud and falsification of a single record would mean falsifying the entire chain in millions of instances. This is practically impossible. This reality makes bitcoin, ethereum, and other cryptocurrencies so attractive. Transactions become more transparent through the use of blockchain technology. Since it is a type of distributed ledger, all network participants share the same documentation. This shared version can only be updated through consensus which in practice means that everyone must agree on it. To change a single transaction record would require the alteration of all subsequent records and the collusion of the entire network. This is virtually impossible. As against other record-keeping systems, blockchain is more secure and transparent. Once a transaction is initiated and approved, it is encrypted and linked to the previous transaction. The fact that the information is stored across a network of computers on a single server makes it extremely difficult for hackers to compromise. Increased efficiency, speed, reduced costs and improved traceability make blockchain which is at the core of the operations of cryptocurrency not only an attractive but corrupt-proof virtual system.

From the business perspective, the proliferation of cryptocurrency business can help Nigeria’s fledgling economy to provide employment opportunities for thousands of unemployed citizens roaming the streets in search of a few existing jobs. Already, millions of people are making a healthy income from bitcoin trading all over the world. State actors and governments all over the world have never been the dominant employers of jobs but their policies encourage the corporate world to generate and expand millions of jobs for citizens.

Nigeria can certainly leverage this shared prosperity by encouraging citizens to trade in cryptocurrency. The positive and multiplier effect of this policy on the economy is huge and should not be dismissed with a wave of the hand. A thriving working population is certainly a disincentive for crimes and criminality. The risk factor in bitcoin trading and other forms of cryptocurrency is minimal. It is almost fraud-proof precisely because individual cryptocurrencies are digital and cannot be counterfeited or reversed arbitrarily. Also, one of the benefits is that there is immediate settlement immune from third party delays occasioned by lawyers and notary, etc. This is against the credit card which operates on “pull “system which gives the merchant access to your full credit line. Globally, there are an estimated 2.2 billion individuals with access to internet and mobile who do not have access to the traditional exchange. These people are prospects for the huge cryptocurrency market. The cryptocurrency revolution is not a flash in the pan, it has come to stay.

In the last three years, recent data analysis indicate that the demand for cryptocurrency experts have skyrocketed to 194 percent. And as the ongoing revolution gather steam, this demand will increase exponentially. This will help individuals and companies to make a lot of money. In today’s business place, amazing job opportunities exist for content writers /marketers, data scientists, financial analysts, machine learning engineers, etc.

The possibilities are immense and indeed endless. In the face of these opportunities, should Nigeria and Africa walk away or embrace the bitcoin /cryptocurrency revolution to harness its huge potential?

I think it would be a profound mistake for the continent not to explore this flourishing market or the present and generations yet unborn will not forgive the present crop of leaders who have so far demonstrated avoidable nativity. The possibility of our missing out on this revolution is frightening and unacceptable. We should do everything within our powers to rewrite the present appalling narrative of unpardonable lethargy in our national interest.

Chibueze is Nigeria’s pioneer investor in Bitcoin and is a Blockchain enthusiast