The world’s monetary landscape is shifting, and one of the biggest factors is the dramatic rise in the value of cryptocurrencies so far in 2017. Emerging from the online cypherpunk community, and developed in the late 2000s, cryptocurrencies are digitised coins with no physical format- essentially, it’s currency that exists exclusively in the online world, through a peer-to-peer payment structure based on cryptography that is entirely decentralised from any bank or government.


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The original crypto coin- Bitcoin, developed by Satoshi Nakomoto in 2008, was created as an alternative to traditional money transactions in bank or with cash. Not beholden to any single regulatory authority, with the ability to transfer funds in seconds and at low costs, Bitcoin was (and still is) a revolutionary innovation; but unless you’re a cryptographer, it isn’t easy to get your head around the mechanics of how it actually works.

In effect, a transaction using Bitcoin is basically a transfer of value between two online wallets. A “blockchain”, like an online account or ledger – is used to record and organise these transactions. A string of encrypted code (similar to how banks offer unique transaction PINs to customers) is used as a security measure and serves as proof of ownership. Through this blockchain, which has today been adopted by most other cryptocurrencies in the market, every transaction is registered – keeping a record of the balance in each wallet for every point in time.

This new mode of payment promises to remove all the faults within the regulated money system most people have become accustomed to. No middle men, intermediaries or ‘trusted’ third parties, less costly, and the blockchain advantage of coded security that may considerably reduce fraud. These features have turned cryptocurrencies into an attractive alternative.

The global sense of urgency for cryptocurrencies that has developed in 2017 is due to a surge in supply and demand. Even countries such as Russia and China, that have a conservative reputation, are rumoured to be in development stages of creating their very own national cryptocurrencies. Economic leaders are discussing them, investors are trading them, and values of the most popular digital coins in virtual circulation – including Bitcoin, Litecoin and Ethereum, have been shooting through the roof.

For the better part of the year, however, cryptocurrencies have been the wild elephant in the room that no bank or regulator in Nigeria want to really discuss, or know how to tame.

Nigeria’s evolving relationship with cryptocurrencies

Compared to many Asian and Western countries, the stumbling block for cryptocurrencies in Nigeria is massive, mostly due to the confusion surrounding their regulation. Historically, Nigeria is sensitive when it comes to scam artists and people who look for any loopholes to manipulate the system. All the more reason, then, for the nation to be extra cautious when it comes to a young, new, fiscal alternative that is not controlled by any governing body.

In January 2017, the Central Bank of Nigeria (CBN) issued a circular that strictly banned all local banks from dealing with cryptocurrency transactions, due to their anonymity and the hardships that come with tracing them.

A few months down the line, the First Vice President, Chartered Institute of Bankers in Nigeria (CIBN), Dr. Uche Olowo, clarified decisions around cryptocurrencies during a meeting organised by the institute. “Interested parties view it as the highest performing and the most valuable currency in the world,” Olowo said.

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