A Critical Assessment Of The Surge Of Cryptocurrencies And Its Usage In Africa (A Case Study Of Selected Fintech Companies In Nigeria)

A Critical Assessment Of The Surge Of Cryptocurrencies And Its Usage In Africa (A Case Study Of Selected Fintech Companies In Nigeria)

Chapter One

Preface

Background of the study

The swapping of goods and services has taken place using a variety of styles and mediums in mortal history. numerous of these styles and mediums are frequently palpable, similar as essence coins or paper plutocrat.

Without a mistrustfulness, the global fiscal community is embracing the rearmost technological metamorphosis from real currency to nearly abstract currencies. Cryptocurrencies were born as a result of this swell. Cryptocurrency is described as a digital record- keeping system that uses balances to keep track of trading commitments and is accessible to all dealers. Bitcoin( BTC), Litecoin( LTC), Ethereum( ETH), Ripple( XRP), Bitcoin Cash, Neo, Iota, gusto, Qtum, Monero, and Ethereum Classic are exemplifications of crypto currencies. A cryptocurrency system is defined by two parameters plutocrat growth rate µ ≥ 0 and sale figure charge at a rate τ ≥ 0. Since the creation of Bitcoin in 2009, multitudinous private cryptocurrencies have been introduced. Since the arrival of cryptocurrency, it has been getting a lot of media attention, and its total request value has reached128.78 billion USD in 2019. It operates grounded on a technology called ‘’ Blockchain ’’.

Cryptocurrency, according to Nakamoto( 2008), is a peer- to- peer Electronic Cash System. Cryptocurrency’s peer- to- peer frame is grounded on blockchain, allowing deals to take place directly between druggies without the need for an conciliator( Hameed & Farooq 2016; Grech, & Camilleri, 2017). It makes secret deals between parties, and as a result, parties are ignorant of each other’s true individualities( Dierksmeier & Seele, 2016). Since the entire specifics of a party’s sale on the cryptocurrency blockchain are intimately revealed to other people, this might be essential( Bech & Garratt, 2017). Unlike the traditional currency which is issued at interval determinable by the Central Bank of each country, cryptocurrency like bitcion are booby-trapped at a fixed allocation algorithm similar that the number of Bitcoins to be booby-trapped is halved every time.

The maturity of fiscal institutions and governments have encouraged online payment as a secure and fast way to change physical currency. This system of currency use is an attempt to digitalize physical currency. Total and real digital currencies( i.e., no physical form) have been launched from time to time in recent times.

While the origin of plutocrat is unknown, coin and paper currency can be traced back to the seventh centuryB.C.( Dumas, 2015). While plutocrat hasn’t changed much since also, its purpose remains the same to promote deals. Credit cards, online banking, and bitcoin are now accessible.

Polillo( 2011) introduced a fascinating proposition regarding the product of currencies, the proposition suggests that there are general social processes that allow for colorful kinds of networks and associations to be suitable to produce currencies. He also presented the principle of plutocrat as “ multiple currencies ” and argues that through social practices, societies constantly transfigure plutocrat in creative ways to more suit their requirements.

Berentsen and Schär( 2018) affirmed that Bitcoin( the first honored cryptocurrency) began with the white paper that was published in 2008 under the alias “ Satoshi Nakamoto, ” as it was published via a mailing list for cryptography and has a analogous appearance to an academic paper. It was made given that the generators ’ original provocation behind Bitcoin was to develop a cash- suchlike payment system that permitted electronic deals but that also included numerous of the profitable characteristics of physical cash.

According to Silva( 2016), cryptocurrency is a system characterized by a computer program of three main axes first, a public system of sale enrollment called block- chain, which serves as an account book of its entries and exits; second, an encryption algorithm called asymmetric encryption- associated with a evidence- of- work, which is used to validate operations of the currency; and third, a public system of sale enrollment called block- chain, which serves as an account book of its entries and exits.

Cryptocurrency is a virtual currency that uses a web- grounded communication protocol to prop in the transfer of wealth from one person to another, but when the rates of plutocrat are put in perspective, Bitcoin appears imperfect. According( Gulled & Hossain, 2018).

Some of those currencies which have surfaced in the recent time are Litecoin( LTC), Ethereum( ETH), EOS( EOS), Cardano( ADA), NEO( NEO), Bitcoin( BTC), Monero( XMR), Ripple( XRP), gusto( gusto).

Statement of the Problem

Cryptocurrency is a form of digital currency that’s erected on a slice- edge technology called blockchain. Small companies are among its guests. Cryptocurrency is a form of digital currency that’s erected on a slice- edge technology called blockchain. Small companies, fiscal tech startups, and retail guests are among its druggies, who use it to transfer plutocrat across borders and as an investment asset. Because crypto means similar as Bitcoin and its forerunners, also known as altcoins, have gained wide acceptance and operation for purchases, trading, and banking, they’ve come decreasingly popular. Bitcoin, the most common cryptocurrency, has a gross diurnal exchange volume of about$38.68 billion and a request capitalization of$123.12 billion as of April 2021.( http//www.nairametrics.com)

numerous Africans use cryptocurrencies similar as Ethereum, Ripple, Bitcoin, and Litecoin for banking and plutocrat transfer purposes. There are a variety of reasons for the rise in cryptocurrency use on the mainland, but among them is the unreliability of original currencies. In utmost situations, the high position of profitable volatility in utmost corridor of Africa renders cryptocurrencies a feasible medium for wealth storehouse rather than storing its worth.( SourceVanguardngr.com)

It’s a cheaper way for individualities and entrepreneurs to shoot finances to everyone around the world for remittance, merchandisers,e-commerce shopping, and to and from musketeers and family members located abroad, since it costs far lower than numerous marketable banks in Africa, which charge extravagant freights in an changeable currency request and unreliable profitable ecosystem.

As a result, numerous Africans in civic areas have limited Internet content due to smartphone achromatism, and similar platforms have made cryptocurrency relinquishment available to all via mobile.

Crypto- means are being used by fiscal tech startups in Africa who are dismembering the request with arising technology like mobile currency. They are still using Blockchain and cryptocurrency to streamline their operations both within Africa and internationally. For the requirements of the ordinary African, numerous of these startups have developed blockchain tools, token exchanges, and plutocrat transfer services.

In addition, numerous African companies and startups are also embracing and paying in cryptocurrencies, XRP, bitcoin, and bitcoin cash in order to meet transnational merchandisers and guests. A adding number of innovative payment gateways and exchanges grounded in Africa and around the world, similar as Payfast, Gemini, Coinbase, Luno, Bitpay, Bitstamp, Bithumb, Binance, and others, have made this possible for numerous Africans.

Luno Exchange, headquartered in South Africa, is Africa’s leading cryptocurrency exchange. It was established in 2013. It has over a million druggies in over 40 countries and is the first crypto exchange to be located in Africa, with services in Nigeria and South Africa. It offers the crypto trading dyads ZAR/ BTC and NGN/ BTC.

Since the global recession of 2008, crypto means similar as Bitcoin were developed with the end of creating a digital currency that was open and controlled by guests, pushing for low sale costs, bettered protection, and easy access to its medium of choice.

Nigeria has Africa’s biggest biodiversity, but the government has yet to control its use and trade. Cryptocurrencies have been declarednon-legal tender by Nigeria’s central bank which has urged numerous agitation by Nigerians calling for the review of the ban placed of the trade of crypto in the country.

Ideal Of The Study

The primary ideal of this study is to critically assess the swell of cryptocurrencies and its operation in Africa. This study tends to find out if the unreliable original currencies of countries of Africa contributed to the swell of cryptocurrencies operation in the mainland. This study also probe if the high query of husbandry in utmost part of Africa makes cryptocurrencies a feasible medium for asset operation in lieu of storing its value.

Exploration Suppositions

The following null suppositions are formulated and tested in this study

H01 The unreliable original currencies of countries of Africa didn’t contributed to the swell of cryptocurrencies operation in the mainland.

H02 The high query of husbandry in utmost part of Africa didn’t make cryptocurrencies a feasible medium for asset operation.

Significance of the study

This study will be of significant benefit to all countries of Africa and the world at large because it’ll bring to their notice the benefit of cryptocurrencies and how it contribute to feasible medium for asset operation. This study will also help the government of African countries and the world at large to see the need to stabilize their husbandry and ameliorate their original currencies value. This study will also serve as a standard for scholars, scholars and experimenters who may want to carry out further exploration on this content or analogous area in the future.

Compass Of The Study

This study shall enroll staff of Paystack, Flutterwave, Remita and Interswitch in Lagos State as actors for this study.

Limitation of the study

The major factors amongst others that posed a challenge to the experimenter while carrying out this study were inadequate time given for the study, shy literature on this content, and inadequate fund.

Description Of Terms

ASSESSMENT the action or an case of making a judgment about commodity

SURGE a sudden important forward or overhead movement, especially by a crowd or by a natural force similar as the drift.

CRYPTOCURRENCY is a digital currency that can be used to buy goods and services, but uses an online tally with strong cryptography to secure online deals. important of the interest in these limited currencies is to trade for profit, with bookmakers at times driving prices overhead.

Usage the action of using commodity or the fact of being used.

AFRICA Africa one of the 7 mainlands of the world. Africa is the world’s alternate- largest andsecond-most vibrant mainland, after Asia in both cases. At about30.3 million km ² including conterminous islets, it covers 6 of Earth’s total face area and 20 of its land area. With1.3 billion people as of 2018, it accounts for about 16 of the world’s mortal population.