Connect with us

News

Ghana And Nigeria, Take Opposing Stance On Crypto

Published

on

On the 25th of February 2021, the Bank of Ghana issued a press release revealing how it intends to handle innovations in the financial space. With special preference given to blockchain, this stance by Ghana’s Apex over blockchain and by extension cryptocurrency, largely contradicts that of its West African counterpart. The Apex Bank of Africa’s largest economy has only a few weeks ago expressed its distrust for the blockchain-powered currencies, noting that they are a means to an illegal end. 

While the Central Bank of Nigeria has since received a unanimous backlash from many Nigerians, hopes that it will reverse its ban on cryptocurrencies isn’t imminent. Its stance on the widely acclaimed cryptocurrencies has been reiterated by the CBN governor who says ” crypto is money out of thin air used by players in an electronic dark world where transactions are extremely opaque, black, not visible and not transparent.” 

Despite the Central Banks unequivocal stance against crypto, Nigeria remains one of the leading countries in crypto usage globally. With over half a billion dollars transacted in cryptocurrencies to date, crypto usage shows no signs of stopping. Rather the ban has drawn the attention of many to the decentralized currencies and why they seem to be causing a stir in the country’s financial ecosystem. 

Ghana thinks different

In the circular released by the Central Bank of Nigeria, it claims other countries view cryptocurrencies with as much disdain as it does. 

Apparently, Ghana isn’t one of those countries. The circular released by the Bank of Ghana, reveals it’s giving a chance to the blockchain-powered currencies to operate within its financial space. 

Taking into consideration that the current state of finance is evolving, the West African nations top bank is prepared to build a regulatory framework that oversees and supports financial institutions in taking on innovative models on delivering financial services. 

Ghana’s direction on crypto can be perceived as friendly unlike Nigeria’s. In what many call an outright ban on cryptocurrencies, the position taken by Africa’s most populous nation on crypto is anything but friendly. 

Perhaps the Ghanaian financial regulators are accepting an unstoppable crypto takeover, a market capitalization of over a trillion dollars makes crypto a technological innovation that should not be ignored. 

With top institutions such as Black Rock, Tesla and Grayscale acquiring large volumes of bitcoin and other currencies, it shows that crypto isn’t a force to be stopped or controlled but only regulated.  

The Bank of Ghana is already on the right path to getting a regulated hold of cryptocurrencies. Fully backing financial institutions to experiment with blockchain, the Bank can understand the technology better and forge an advance regulatory framework that keeps the technology within legal bounds. 

Sandbox Pilot 

A sandbox is a controlled environment that simulates real-life usage of a program or product

Bank Ghana’s regulatory and innovation sandbox pilot, is in collaboration with EMTECH service LLC. EMTECH is a fintech company for central banks. The company allows central banks to test projects such as central bank digital currencies in the sandbox with APIs that enable Fintech and mobile money apps to work with the CBDC 

The company will help with a proper and faster review of innovative projects in Fintech. With multi-party collaborations and integrating seamless workflows, EMTECH will assist the Bank of Ghana in getting a detailed review of what any Fintech innovation will look like. 

Though an accommodating approach to crypto and blockchain in Fintech the Bank’s direction is still cautious, it creates an enabling environment where it wields the power not only to regulate but to understand. 

State of Crypto in Africa.

Twitter CEO, Jack Dorsey has said there’s no better place for bitcoin to thrive than Africa. However, some Africans don’t share the same view. Some countries like Nigeria see it as a threat to it’s financial stability. Ironically Africa’s financial instability has been highlighted as the reason why bitcoin would thrive there.

Bitcoin is already a lifeline for many as the value of the naira sinks. 

While crypto adoption in Africa is no doubt on the rise, the lack of crypto infrastructure is still a major hurdle for many African nations. Only 20 of the 10,267 bitcoin nodes are in Africa. 

Likewise, an unequivocal stance by many African countries on the crypto issue still stands in the way of further adoption and more use cases. 60 per cent of African countries do not have a clear stance or regulation concerning digital currencies.  

Morocco, Nigeria, Algeria and Libya have pronounced an outright ban on cryptocurrencies. Making usage in such countries practically impossible or strenuous.

The economic realities in the many African States make cryptocurrencies a viable alternative for international transactions as well as wealth creation. Unfortunately, African governments are not taking the necessary steps to understand the technology and how it can help the current financial situation. 

The Bank of Ghana has taken a step in the right direction with its sandbox pilot. Though a cautious first step, it improves the understanding of the technology and could facilitate an innovative and never before seen regulatory framework that will usher cryptocurrencies into mainstream finance 

Comments

Bolu Abiodun is a recent graduate of Theatre and Media Arts, Federal University Oye-Ekiti. A journalist with over a year's experience on the job. A former editor at American Media company Project Forward, he is a skilled content creator, social media manager and digital marketer.

Continue Reading
Click to comment

Leave a comment:

Crypto Assets

Crypto prices drop as global market fear increases

Published

on

Top cryptocurrency prices have fallen amidst a drop in stocks and fears over China’s Evergrande debt crisis. In the last 24hour, Bitcoin dropped from $47,772 to $42,630 shedding about 8.58%. this is the lowest in price since another bull run began on Sept 5 after the April crash.

El- Salvador’s President, Nayib Bukele sees the fall as an opportunity to invest more. Recall that the country adopted Bitcoin as a legal tender on September 7. Despite the adoption, the price of Bitcoin has fallen by almost 14% since then.

Other coins have experienced dramatic crashes within the last 24hours. Solana, a coin that has experienced 355% growth within the last 3 months fell from $162 to $130 shedding about 11.39% within the last 24hours. Solana’s fall may be categorized by the 17-hour outage which the founder, Anatoly Yakovenko said was caused by bots “flooding the networks”

Ethereum fell by 9.37% while Dogecoin and Axie Infinity fell by 11.22% and 14.14% respectively within the last 24hrs hours. While crypto experiences dark Monday, El-Salvador keeps investing more money in Bitcoin.

A look at the global market

The global market is experiencing fear due to the Evergrande debt crisis. A report published by the University of Michigan shows that consumer’s sentiment is beginning to decline. This trend alone may impact the crypto market as well.

On the other hand, the global market downturn must have been spurred by the Evergrande debt crisis. The company grew to be one of China’s biggest companies by borrowing more than $300bn. Last year, Beijing made rules to control the debt owed by big real estate developers. This led Evergrande to offer its properties at major discounts to raise more money to keep the business afloat. Right now, the company is struggling to meet the interest on payment of debts.

Why would it matter if Evergrande fails?

The collapse of the multi-million dollars company would affect the global market; including the crypto market. Many people bought properties from Evergrande and they expect to make gains. If Evergrande falls, crypto investors will be forced to withdraw more money to keep their business running without the means to invest more. When one business fails, the other gets affected indirectly. This also applies to other firms that do businesses with Evergrande.

The potential impact on China’s financial system is another effect of Evergrande’s fall. In his statement to BBC, Mattie Berkink, the Economist Intelligence Unit (EIU), said that “the financial fallout would be far-reaching. Evergrande reportedly owes money to around 171 domestic banks 121 other financial firms” if the company fails, other lenders or businesses may be forced to lend less. Thereby leading to a credit crunch- a situation where companies struggle to borrow money.

Comments

Decentralize Daily

From Crypto and Blockchain to AI, Fintech and Web 3.0 delivered twice in a week (Mondays and Fridays)

Continue Reading

Bitcoin in Africa

The rise of CBDC in African economies

Published

on

Many nations have taken cues from the world of crypto and its resounding successes over the last decade. In order to avoid getting left behind, governments worldwide are increasingly turning their attention towards implementing some form of digital currency, a CBDC which in full is Central Bank Digital Currency. Although inspired by cryptocurrencies, CBDC’s are quite different from traditional crypto platforms. The main differences are that CBDC’s are unlikely to be decentralized, the supply of this currency regulated by the host’s country’s central bank as the CBDC is designed to operate as a sovereign legal tender, the digitized form of the host country’s fiat currency. Thus, a central bank may issue digitized tokens of its currency of which their value is pegged to the fiat currency of the nation in question, making CBDC’s stablecoins.

Africa has seen a rise in the use of cryptocurrencies and it’s still pushing frontiers in this sector. Although the use of crypto in many African nations is becoming more and more pervasive by the day, the tone of governments in many of these countries toward the sector is cautious at best and threatening at worst. However, a few nations have voiced interests in creating digitized versions of their legal tender to function as a CBDC. Amongst these are Ghana, Nigeria, Morocco, Kenya and Tunisia.

Many of these projects are still in the research phase or developmental phase however. A good example is Ghana’s proposed CBDC, the E-cedi being developed in partnership with German company, Giesecke + Devrient. Nigeria’s CBDC project, the eNaira has been announced and according to Nigeria’s central bank, this CBDC will be launched sometime in 2021. To that end, the CBN has partnered with fintech company, Bitt Inc. to serve as the technical partner in the eNaira’s development. Reportedly, the CBN had made the decision to digitize the Nigerian Naira in 2017.

While the pursuance of digital currencies in African nations is a welcome development, implementation of these schemes isn’t without challenges. Chief among the issues countries in Africa face would be the already existing financial service inequality and poor penetration of internet access in the continent. These challenges must be tackled in order to allow for mainstream adoption of CBDCs and the subsequent provision of financial inclusion. The benefits largely depend on the peculiarities of the nation deploying them. For instance, a digital currency is thought to help Nigeria increase foreign remittances, it’s second largest source of forex after oil. Whatever the outcome of these projects, it is becoming apparent that CBDC’s have come to stay.

Comments
Continue Reading

Decentralize Brief

Bitcoin trades above $51k ahead of El Salvador’s adoption

Published

on

Bitcoin growth

Bitcoin price has rallied above $51,000 ahead of El Salvador’s adoption. The immediate surge in price may be due to the social media campaign that everyone should buy sats of Bitcoin to support El Salvador’s plan to make the coin a legal tender or it may be due to the news of El Salvador’s adoption of the coin as a legal tender on September 7. Users of social media platforms like Twitter and Reddit are discussing how they will buy Bitcoin of $30 each to mark the new El Salvador Bitcoin law.

The surge in Bitcoin’s price began in the last 24hrs with the price rallying around $51,955 with a 3.37% increase. This is an all-time high after the April crash that brought the price of Bitcoin from $64k down to $28k. The move by El Salvador to be the first country that accepts Bitcoin as a legal tender and the social media campaign that leads to a surge in price ahead September 7 are a repetition of events that occurred late last year and early this year with regards to institutional investors and how the price of Bitcoin skyrocketed.

El Salvador, a country in Central America, has been preparing heavily to adopt Bitcoin by installing ATMs to allow citizens to convert the token into US dollars. Last week, the country’s Legislative Assembly passed a law to allow for the creation of a $150m Trust to support the conversion of Bitcoins to US dollars.

To promote the use of Bitcoin, the government states that it will give the adult population of El Salvador $30 in Bitcoin once they download “Chivo” the wallet issued by the government. This was confirmed by the Finance Minister, Alejandro Zelaya.

What this means for Bitcoin investors

Apart from the adoption by Salvadorians, on-chain analytics show that Bitcoin is in high demand. The fourth halving that occurred will make Bitcoin become a scarce token in the nearest future. Thereby increasing the price sporadically.

With El Salvador’s interest in Bitcoin, other countries are likely to follow suit- Panama is considering following El Salvador’s lead. History will repeat itself as this development will serve as another crypto rout that occurred early this year when Tesla and MicroStrategy announced their support for Bitcoin.

El Salvador’s new law allows the use of Bitcoin as a legal tender it can be used to buy goods, pay for taxes and bank loans. This means more demand for Bitcoin, with the fourth halving that occurred, it means less supply. A common rule of economics for demand and supply will apply. Prices are projected to keep rising. At the time of writing this report, Bitcoin is trading at $51,839 with a projection of $52k before the end of today and higher tomorrow when Salvadorians begin to use the token.

Comments
Continue Reading

TRENDING

%d bloggers like this: