Digital currencies are also known as digital money or electronic money. It is abstract and very much different from the physical currencies we are used to, although it has almost the same characteristics as the popular physical currency, it can be used to complete transactions on the internet. Ownership of digital currencies can be transferred from one party to the other instantly.
Just like the physical currency, digital currency can be used to pay for physical goods and services. The extent to which digital currencies can be used is restricted and not unlimited.
Examples of digital currencies are virtual currencies and cryptocurrencies such as bitcoin, robocoin, e-gold, rand, ven, litecoin, TBC and several others.
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The buying and selling of digital currencies in Nigeria is decentralized, this implies that it is not regulated by the Central Bank of Nigeria.
Bitcoin, which is one of the most popular type of digital currency was made popular in Nigeria when the promoters of the popular ponzi scheme MMM, adopted it as a means of payment.
Digital currencies are widely used in various online communities as a means of payment for physical goods. Before I explain why the adoption of digital currency in Nigeria is still poor, I will be pointing out the uses of digital currencies.
Uses Of Digital Currency
1. With the use of digital currencies, sending money to friends, family and loved ones at any part of the world has been made easier.
2. Some digital currencies such as bitcoin can be used to pay bills as some outfits allow it as a proxy for cash transactions.
3. Digital currencies can be used to purchase physical goods and services from anywhere around the world especially from an online store.
4. It is normally used in an online gaming community when a gamer needs to pay for certain features, especially in video and mobile games.
5. It is used as form of investment or business. This is for people who buy digital currencies in order to resell and make profits.
6. It is an acceptable mode of payment in some online gambling sites due to it’s universal features.
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Digital Currency Use In Nigeria And The Slow Rate Of Adoption
The use of digital currencies in Nigeria is gradually on the rise, but not as much as expected, especially with the fact that Nigeria is a fast developing country, one of the largest economies in Africa and a great hub for investors from all around the world.
Most Nigerians still prefer the use of their ATM card or fiat money during cash transactions despite the advantages of digital currencies over many payment systems. These are mainly due to some reasons which will be duly discussed as follows.
1. Internet penetration
The rate of internet penetration in Nigeria according to the Nigeria Communications Commission (NCC) stands at 50.1%, the figures are not encouraging and therefore wouldn’t help the popularity of digital currencies in Nigeria.
In order to make transactions with digital currencies, a PC or a smartphone with a good internet access is a nonnegotiable necessity. The lack of reliable access to internet technology in Nigeria has no doubt destroyed the foundation of digital currencies.
Illiteracy rate in Nigeria is still high and this isn’t a healthy foundation for the adoption of digital currency in the country.
A lot of uneducated Nigerians finds it difficult understanding what it means and how it works. Therefore they would not want to make use of something they know nothing about especially as it involves money.
The economy has been in a bad shape and no Nigerian would want to experiment something new with his or her hard earned money. They would rather make use of the known available alternatives despite their high costs.
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Many parts of the country are still underdeveloped and consequently lack basic social amenities. The country still can’t boast of a stable power supply.
I use to say “darkness keeps people in the dark”. That is the situation in play here, most parts of the country lacks adequate power supply and only the fortunate are able to acquire alternative means of power supply while the unfortunate are left to wallow in the dark and are not aware of happenings around them. I have witnessed cases where an entire community doesn’t have a clue as to what bitcoin is used for.
4. Government’s disapproval
The Nigerian government has constantly warned it’s citizens against the use of digital currencies. These currencies are not regulated by any governmental body hence the need to be very cautious as there won’t be any form of compensation in cases of loss.
The government through the Securities and Exchange Commission (SEC) released a statement warning Nigerians to exercise caution when dealing with digital currencies.
The statement also disclosed that none of the persons or organizations promoting the sales and use of digital currencies are recognized by any regulatory authorities in Nigeria.
5. It is highly risky
The risks involved with the use of digital currency is another reason why a lot of Nigerians have decided to shy away from making transactions with the different types of digital currencies available.
One of the risks involved is its high volatility. Digital currencies are subject to rapid incline and decline. Another risk involved is the possibility of getting your wallet hacked.
It is also very susceptible to fraud as all transactions are done online. There is also a high risk of malware attack. This is also very dangerous because a malware attack can corrupt all relevant information and most especially your wallet, thereby leaving you with an insurmountable loss of fortune.
6. Largely unpopular
In Nigeria, majority of the online stores and online merchants haven’t accepted the use of digital currencies such as bitcoin, swisscoin e.t.c as modes of payment during online transactions.
This is another reason why Nigerians have failed to fully adopt the use of digital currencies as it is still largely unpopular in this part of the world.
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7. Not recognized in banks
Digital currencies are not recognized in Nigerian banks. This is another major reason why a lot of Nigerians have frowned at its use. It is surprising how you have a currency you are unable to tender at the bank.IMPORTANT!: Follow us on Instagram @InfoGuideNigeria
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