The world has gone from being new to digital currencies to having them widely adopted in just a few years. In Nigeria alone, cryptocurrency exchange Kucoin reported that 33.4 million Nigerians traded or owned crypto assets using peer-to-peer networks, despite restrictions on crypto transactions. currency by the CBN.
The Covid-19 pandemic has accelerated the acceptance of digital technologies and accelerated the shift to digital solutions. Although the world has returned to normal, this new behavior has persisted as consumers remain adamant about using digital payment solutions. Data from Nigeria’s interbank settlement system shows that cashless transactions grew 44% year-on-year to $117.33 billion in the first four months of 2022.
Undoubtedly, these developments indicate that digital currency is not a bubble but here for the long haul.
Depending on who you hire, cash is no longer king.
To date, Nigeria’s 24.2% adoption rate is the highest rate of crypto ownership in the world, a bitcoin.com investigation revealed. The stats are also interesting on the global front. At the recent Milken Institute Global Conference, Brian Armstrong, CEO of Coinbase Global, said that “a billion people around the world will be using cryptocurrency technology in some way by the end of the day. end of this decade.
Despite the crypto market crash, interest in digital currencies and assets remains strong. A Bank of America survey in June showed that 91% of 1,013 people own or plan to buy crypto in the next six months. The percentage remains the same compared to the number of people who bought in the last six months before the last crypto wash. Besides the promise of attractive investment returns, the adoption of cryptocurrency reflects a more fundamental paradigm shift supported by a revolutionary new technology known as Blockchain. This paradigm shift is perhaps evident in the interesting trend where, although central banks around the world primarily oppose digital currencies, they are now also creating similar instruments in a form called CBDC.
IBM defines blockchain technology as a shared and immutable ledger that facilitates the process of recording transactions and tracking assets in a corporate network. One of the main advantages of digital currency and blockchain technology is decentralization or decentralized finance (DeFi). Networks built on blockchain technology enable fast, reliable, and secure payments at a fraction of typical costs without any third-party involvement. It also offers more transparency and a rich ecosystem of developers fostering rapid financial innovation. With these characteristics, it is not impossible to imagine a world where decentralized finance (Defi) would replace the conventional financial system. Nor is it far-fetched to see why some innovative and forward-thinking tech companies are beginning to leverage blockchain technology to reinvent the banking system in Nigeria and Africa in general. Area, Africa’s first blockchain platform for payment processing, is paving the way here. Launched in 2021, the decentralized payment network makes it possible to process interbank transactions directly between banks, on the blockchain, without the intervention of any intermediary. With Zone, industry players now have a reliable and scalable payment network that enables instant and frictionless payments within and between all African countries.
Notable reasons for the stubborn interest in digital currencies are convenience and lack of geographic restrictions. Digital currencies do not require any interaction with Bank branches or staff. The complicated process of carrying out international transactions is greatly simplified with digital currencies, so that within minutes a remote person in Jamaica can send funds to someone in Ogun State, taking advantage of blockchain technology.
A glimpse into the future of interbank and cross-border transactions
A few years ago, people spent so much money to send or receive payments across borders. Speaking to a young Nigerian resident with families in Cameroon, he said, “I once had to pay around 7,000 naira to send only 12,000 naira to someone in Cameroon.” Many Nigerians studying in the Diaspora can also testify to the cumbersome and expensive process of transferring money from their Nigerian account to international bank accounts for the settlement of tuition fees.
Transcending global borders, digital currencies allow flexibility and economic growth in a way. They have the potential to boost cross border trade between nations as they are cheaper, simpler and faster than today’s alternatives. This is one of the reasons behind the launch of the apex bank digital currency – eNaira. Godwin Emifiele had said at the launch that “digital currency was introduced as part of the CBN’s cashless policy to improve cross-border trade, improve the effectiveness of monetary policy and increase remittances from a wide diaspora base”. President Muhammadu Buhari has also insisted that the adoption of eNaira technology and blockchain offers the potential to increase Nigeria’s GDP by $29 billion over the next ten (10) years.
While we can’t ignore the volatility of popular digital currencies such as Bitcoin, Obi Emetarom, co-founder and CEO of AppZone, believes that stablecoins can help manage this risk. He also thinks regulators are crucial to the widespread adoption of digital currencies. At a recent Blockchain Summit, Obi, in a fireside chat, said, “Anyone who hopes there will be a world where you adopt cryptocurrencies without regulator support should forget about it. That will never happen; except in a world where there are no governments.
Is it safe to say that if the CBN succeeds with eNaira and Zone succeeds with its blockchain technology, the tedious process of transferring funds across borders could end faster than we think? Maybe!
Application areathe parent company of Area, is one of the leading fintech software companies in Nigeria and has recently evolved into a payments infrastructure company using blockchain technology to decentralize processing and record keeping for digital payments while enabling clearing and settlement. real-time settlement. Zone offers banks, fintechs and other financial service providers the ability to directly connect and transact interbank with each other in a peer-to-peer fashion without requiring the services of an intermediary. nor incur any associated costs.
Zone’s blockchain technology acceptance rate by major financial institutions in Nigeria has been impressive, with 15 major commercial banks currently integrated into its blockchain network. The company has hinted at plans to expand its footprint to other parts of Africa to simplify payment processes in the region. As Africa’s Layer 1 Blockchain network for digital payments in fiat and regulated digital currencies, they are building the rails for the mass adoption of DeFi in Africa.
The prediction that the Internet was a bubble following the popularization of the World Wide Web in 1991 is one of the worst predictions of all time; much like the internet, digital currency could be here to stay.