2021-04-14 17:50:12

The Gold Rush, Time for a Change?

Wednesday April 14, 202/ 04:55 PM / By CSL Research / Header Image Credit: Sofi/Ecographics

 

Despite the Central Bank of Nigeria expressing its concern
about Cryptocurrency in Nigeria, the cryptocurrency space has continued to roll
out ingenious solutions to real-world problems. One of the most recent
solutions via the platform is the advent of Non-Fungible Tokens (NFTs), a unit
of data stored on a blockchain to certify that a digital asset is unique and
non-interchangeable. It is an innovation that allows that an artist gets
digitized title/ownership for their work. Based on a report from coinbase
yesterday, NFTs’ adoption is fast growing among Nigerian creatives, given that
it provides a marketplace for creatives and art collectors across the globe.
Although currently, the platform has recorded complaints from some artists
whose artworks were minted without their consent, the platform’s potential
market for African creatives is undeniably massive.

 

Over time, the Nigerian creative industry has been quiet due
to perennial problems such as inadequacy of patronage and piracy, which
disincentivizes players in the space. This problem, coupled with the apparent
low interest in other economic segments, led to Nigeria’s current
overdependence on oil receipt. Most creative deals in the Nigerian NFT space
are currently being consummated anonymously. Furthermore, Nigeria being the
second largest market for cryptocurrencies globally over the last five years,
with a market worth of trade totalling 60,215BTC, portends an interesting
figure when the segments’ potential proceeds are considered.

 

According to the National Bureau of Statistics, Nigeria has an
unemployment rate of 33.3% as of Q4 2020. There is also the recent prohibition
of local banks from facilitating cryptocurrency transactions. As an offshoot,
the NFL’s ability to provide support to the economy in the area of rightly
engaging creatives and other providers of ancillary services in the segment
could be frustrated. There are also indications that Nigeria might be setting
itself up to miss out on an otherwise potent foreign exchange source. In an era
where oil receipt is becoming increasingly unreliable, avenues like this could
provide a decent level of support given Nigerians’ tenacity and creativity,
hence drawing more accretion to its external reserves.

 

It is undeniable that
Cryptocurrency poses some downside concerns in how it could easily aid some
undesirable ventures, such as money laundering and terrorism financing.
Nonetheless, we noted that Authority’s efforts should be geared more towards
finding common ground where those concerns could be mitigated instead of
shutting down the entire space. Noteworthy is that the buying and selling of cryptocurrencies
have continued unabated since the last CBN’s directives were issued. Is it time
to retract those directives and find a more effective way of combatting
cryptocurrency concerns? Yes! However, we opine that as we advance, every move
should be tailored to ensure Nigeria is not blindsided in this gold rush.

 

 

 

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