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Is Cryptocurrency Legal In Nigeria?

A cryptocurrency is a digital currency that is used to carry out business transactions. In simple terms, it is a form of payment employed for the purchase of goods and services. Cryptocurrencies let you buy commodities, and even trade them for profit. However, it is important to note that a cryptocurrency uses an online ledger that has strong cryptography which helps in securing online transactions.

Many persons dedicate their interests to these unregulated currencies for the sole purpose of trading for profit. It is worthy of note that in most cases, speculators drive currency prices sky-high. The most prominent and blue-eyed cryptocurrency is Bitcoin. Bitcoin has witnessed a series of volatile price moves in just this year alone, reaching almost sixty-five thousand dollars in the month of April before losing almost half its value in the month of May. But the question remains; is the trade of cryptocurrency even legalized in Nigeria?

Is Cryptocurrency Legal In Nigeria?

The Central Bank Of Nigeria(CBN) released a statement that was directed to other banks within Nigeria on the 5th of February 2021, stating that any forms of dealing with cryptocurrencies or accelerating the payment for cryptocurrency transactions are prohibited. To effect the order, the CBN instructed all banks and financial industries within the country to identify with entities or that exchange goods and services in cryptocurrencies and close their accounts.

On March 22, 2021, the Central Bank Of Nigeria(CBN) clarified the statement it issued the previous month. The order of the Central Bank of Nigeria concerning the prohibition of cryptocurrencies in the country seemed to instruct banks and financial institutions to shut down all accounts linked to cryptocurrency transactions.

A report on March 21, 2021, revealed bank officials assuring Nigerians that the statement should not be mistaken for an absolute ban. On the contrary, the Central Bank of Nigeria affirmed that it had rehashed an already inflicted 2017 ban on institutions that promote cryptocurrency exchanges.

Why Are Cryptocurrencies So Popular?

There are several reasons that cryptocurrencies are trending. A prominent one is that Cryptocurrency always appeals to its supporters for its security and reliability. Other reasons include;

  • Certain supporters like the fact that cryptocurrencies remove the central banks from managing the general supply of money. As a result, banks are prone to using inflation to reduce the value of money.
  • Cryptocurrencies such as Bitcoin are seen as the currency of the future age. Because of this, a lot of supporters are racing to purchase them now. Apparently, they may become far more valuable in the nearest future.
  • Other speculators and supporters simply love the Blockchain technologies behind cryptocurrencies mostly because of its decentralized and recording system that has been proven to be more secure and reliable than the traditional payment systems.
  • Other supporters adore the cryptocurrency simply because it is going up in value. They possess no interests whatsoever in the long-term acceptance of the currency as a way to move money.

Cryptocurrencies — A good form of investment?

Even though cryptocurrencies could go up in value, a lot of investors still view them as speculations and not necessarily real investments. The reason being that cryptocurrencies, like real currencies, do not generate any cash flow. This implies that, in order to make any profit from it, someone else has to pay a higher amount for the currency than you did. In the theory of investment, this is called ‘The Greater Fool’.

On the other hand, a properly managed business increases its value over the course of time by nurturing the cash flow of the operation. So you be the judge! What then do you think about investing in cryptocurrencies?

Other Notables on Cryptocurrencies

As mentioned earlier, a cryptocurrency is a method of payment that can be exchanged online for goods and services. Many companies have supplied their own currencies, sometimes referred to as tokens, and these can be traded exclusively for the commodities that the company provides. In order to access the required goods or services, you’ll need to exchange real currency for cryptocurrency.

Cryptocurrencies function with a technology known as Blockchain. Blockchain is a circulated technology that works by spreading across many computers that control and document transactions. One of the many qualities that make the Blockchain appealing and interesting is its high level of security.

It would interest you that there are over 10,000 different cryptocurrencies out there that are traded openly. This statistic was supplied by a market research website known as CoinMarketCap.com. Cryptocurrencies continue to multiply, augmenting money through inceptive/preliminary coin offerings or ICOs.

Wrap-up

The Central Bank of Nigeria has assured cryptocurrency supporters within and outside the country that they did not place any restrictions on the use of cryptocurrencies, neither are they discouraging people from involving in cryptocurrency transactions. This statement was confirmed by Deputy Governor Adamu Lamtek.

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