CHAPTER ONE
INTRODUCTION
BACKGROUND OF STUDY
Without a question, the global financial system is embracing the present technological transformation from physical currency to practically virtual currencies. Cryptocurrencies were born as a result of this wave. Following the outbreak, there has been a lot of discussion on the importance of crypto-currencies to the Nigerian fiscal system, both positive and negative. Investors have poured money into crypto currencies, the most popular of which is Bitcoin, in the hopes of recouping their losses in the near future. To date, economic research has provided little insight into the economic significance of cryptocurrencies. The majority of current cryptocurrency models are created by computer scientists who are primarily concerned with the systems’ viability and security. Considerations like this, Cryptocurrency, according to Nakamoto (2008), is a peer-to-peer Electronic Cash System. Cryptocurrency’s peer-to-peer architecture is based on blockchain, allowing transactions to take place directly between users without the need for an intermediary (Hameed & Farooq 2016; Grech, & Camilleri, 2017). It facilitates anonymous transactions between parties, and as a result, parties are unaware of each other’s genuine identities (Dierksmeier & Seele, 2016). Because the whole details of every participant’s transaction on the cryptocurrency blockchain are publicly revealed to other users, this may be necessary (Bech & Garratt, 2017). Unlike traditional currency, which is released at intervals determined by each country’s Central Bank, cryptocurrency such as Bitcion is mined using a fixed issuance mechanism, halving the quantity of Bitcoins to be mined.
Although the usage of cryptocurrencies as a basic money account aims to provide everyone with a verifiable online identity (Johnston, 2002), there are many questions about its future. Despite the risks that come with this currency, the rate of growth is both generous and demanding. Governments are caught in a bind as a result of its rapid rise. However, the overwhelming benefits of cryptocurrencies have served as a source for meeting the daily financial demands of millions of people who do not have a job and those who have been laid off.
Unemployment is one of the most pressing developmental issues confronting all developing countries, including Nigeria (Patterson et al, 2006). Unemployment, often known as joblessness, occurs when people are jobless and have actively sought work in the previous five weeks (International Labour Organization, 1982; Fajana, 2000). Though unemployment affects people of all ages, it has a disproportionately negative impact on the youth. Unemployment is a global issue, but it is exacerbated in developing countries, with social, economic, political, and psychological ramifications. It adds to low GDP and causes a rise in crime and violence, as well as psychological effects, negative health effects, and political instability (Njoku & Ihugba, 2011). In Nigeria, unemployment is not a new problem; the national unemployment rate went from 4.3 percent in 1970 to 6.4 percent in 1980, and has continued to rise since then.
Nigeria, Africa’s largest economy, has been unable to effectively handle its rising unemployment rate, which is a ticking time bomb if not addressed soon. Due to an ever-growing dependent population, a decline in overall output of goods and services, and the unprecedented COVID-19 epidemic, which badly impacted the economy and resulted in job losses for thousands of Nigerians, the frontier market’s unemployment rate increased in 2020.
Although the financial generosity of cryptocurrency was astonishing, such unattractive economic data was managed, resulting in a significant engagement of Nigerians. As traditional occupations become obsolete, many unemployed Nigerians can use the techniques underpinning crypto and blockchain to earn revenue. “Nigeria has emerged as a prominent hotspot for bitcoin usage in Africa since its inception.”
STATEMENT OF PROBLEM
Bitcoin, Ethereum, Litecoin, and other cryptocurrencies have aided the unemployed in facilitating small-scale international trade. Parties can sell things in return for Bitcoin or other cryptos using cryptocurrency. These characteristics of cryptocurrencies have successfully served as a source of employment for unemployed Nigerians (Nanus 2018). According to Adebisi (2021), the ban on cryto transactions in Nigeria has elicited a wide range of reactions, frustrations, mistrust, and regret among cryto traders in Nigeria, as banks have blocked all cryto-related accounts, transactions, and cryptocurrencies companies in Nigeria have been shut down, resulting in the loss of hundreds of jobs. As a result, many Nigerians have reverted to their prior state of unemployment, raising the unemployment rate.
PURPOSE OF THE STUDY
The study’s holy grail is to look at the impact of Nigeria’s cryptocurrency ban policy on the unemployment rate. Other specific goals include:
Determine the influence of cryptocurrencies on Nigeria’s economy.
Examine the impact of cryptocurrencies on unemployed Nigerians’ financial needs.
Examine the impact of the cryptocurrency ban on crypto traders in Nigeria.
Look into if cryptocurrencies could be a viable option for unemployed Nigerians.
RESEARCH QUESTION
1. What effect does the cryptocurrency ban have on Nigeria’s unemployment rate?
2. What is the influence of cryptocurrency on Nigeria’s economy?
3. What impact does cryptocurrency have on unemployed Nigerians’ financial needs?
4. Is the restriction on cryptocurrency trading in Nigeria affecting cryptocurrency traders?
5. Did unemployed Nigerians have a chance with cryptocurrency?
SIGNIFICANCE OF THE STUDY
The findings of this study will undoubtedly be of great interest to financial regulators, policymakers, the apex financial institution in Nigeria, and the entire government body, as they will inform them of how the ban on cryptocurrency in Nigeria is harming or benefiting Nigerian citizens, as well as how this policy has contributed to the country’s high unemployment rate.
This study will also serve as a resource for researchers and students who are interested in conducting additional research on a topic comparable to the one covered in this study.
SCOPE OF THE STUDY
This research will look at the impact of Nigeria’s cryptocurrency ban policy on the country’s unemployment rate. Residents of Lagos state are the only ones included in this study.
LIMITATIONS OF THE STUDY
Insufficient funds, time, and the lack of relevant materials in this research subject were the significant constraints that the researcher faced while conducting this research.
DEFINITION OF TERMS
Cryptocurrency: A cryptocurrency is a digital or virtual currency that is protected by encryption, making counterfeiting and double-spending practically impossible. Many cryptocurrencies are decentralized networks based on blockchain technology, which is a distributed ledger maintained by a network of computers.
A policy is a set of principles intended to guide actions and produce sensible outcomes. A policy is a declaration of intent that is carried out through a method or protocol. A governance body inside a company usually adopts policies.
Unemployment: This phrase is used to describe those who are employable and actively looking for work but can’t find one. Those in the workforce who are working but do not have a job are included in this group.
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