PROJECT TOPICS || HIRE A WRITER || DOWNLOAD || CONTACT US

THE EFFECT OF CBN CRYPTOCURRENCY BAN ON THE ECONOMY OF NIGERIA

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. Cryptocurrency is defined as a digital record-keeping mechanism that uses balances to keep track of trading obligations and is accessible to all traders. Bitcoin (BTC), Litecoin (LTC), Ethereum (ETH), Ripple (XRP), Bitcoin Cash, Neo, Iota, Dash, Qtum, Monero, and Ethereum Classic are examples of crypto currencies. Two factors characterize a cryptocurrency system: money growth rate of 0 and transaction fee charging rate of 0.

Since the launch of Bitcoin in 2009, a slew of other private cryptocurrencies have emerged. Cryptocurrency has received a lot of media attention since its inception, and its total market value has reached $128.78 billion USD in 2019. It is based on a technology known as “Blockchain.”

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). 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. 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 of job and financial opportunity for both employed and unemployed people when they become available. It allows them to meet their specific financial needs with ease. Furthermore, the presence of enterprises dealing with cryptocurrency in developing nations such as Nigeria generates more work prospects for its population, as unemployed citizens have more options. These enormous benefits have made a significant contribution to the Nigerian economy.

However, the evolution of cryptocurrencies has provided the poor masses with more than just a means of survival. The majority of Nigerians took advantage of this astounding platform to fill in the gaps left by the country’s poor economy. Regardless of the foregoing, on the 5th of February 2021, the Nigerian government issued an unprecedented ban on the usage and trading of cryptocurrencies in its economy (country). However, the distasteful and impromptu executions had an effect, impression, and perception on the populace. As a result, the goal of this research is to determine, evaluate, and analyze the impact of the CBN cryptocurrency ban on Nigeria’s economy.

STATEMENT OF PROBLEM

Nigeria, among other countries, has the second largest cryptocurrency market, according to Aderonke Alex-Adedipe et al (2021). Nigerians, for example, have traded nearly $500 million in cryptocurrencies in the last five years. The Central Bank of Nigeria, on the other hand, issued a ban on cryptocurrency trading in Nigeria, instructing all commercial banks and other financial institutions to identify and close down accounts of persons who transact in cryptocurrencies. This has been the predicament and issue faced by the people of Nigeria in recent times, as many have lost access to their accounts, some have lost their jobs, increasing the unemployment rate, and others who rely on crypto transactions to fulfill daily necessities have been left helpless (Pecarb 2021). The implementation of certain harsh and irrational governmental decisions has the potential to create, improve, or destroy the economies of both developed and developing countries, as everything that affects residents’ finances will affect the economy in a reciprocal manner (Zeback 1996). As a result, the purpose of this research is to look into the impact of the cryptocurrency ban on the Nigerian economy.

 PURPOSE OF THE STUDY

The study focuses on the impact of the cryptocurrency ban on the Nigerian economy. Other specific goals include:

  1. Examine the economic impact of cryptocurrencies in Nigeria.
  2. Determine the effects of the cryptocurrency ban on the Nigerian people.
  3. Determine the impact of this draconian punishment on the Nigerian economy.

RESEARCH QUESTION

  1. What is the economic impact of cryptocurrencies in Nigeria?
  2. What impact would the prohibition on cryptocurrency transactions in Nigeria have on the country’s economy?
  3. What are the ramifications for the Nigerian people as a result of the cryptocurrency ban?
  4. What is the impact of the prohibition on cryptocurrency transactions on the Nigerian economy?

SIGNIFICANCE OF THE STUDY

The outcomes of this study will be extremely useful to the CBN and the Nigerian government as a whole in determining whether or not to take serious action against cryptocurrency transactions. This research can also be used as a source of information regarding cryptocurrencies and their economic benefits. This study, on the other hand, will act as a resource for anyone planning or conducting a cryptocurrency study.

SCOPE OF THE STUDY

The impact of the CBN’s cryptocurrency ban on the Nigerian economy is examined using four commercial banks in Abuja as a case study.

DEFINITION OF TERMS

Cryptocurrency is a digital currency that may be used to buy goods and services, but it is secured by an online ledger and powerful cryptography.

The economy encompasses the production, distribution, and trading of products and services, as well as the consumption of goods and services by various agents. It’s defined as a “social domain that emphasizes the activities, discourses, and material expressions linked with the creation, use, and management of resources” in general.

The Central Bank of Nigeria (CBN) is Nigeria’s central bank and top monetary authority. It was founded in 1958 by the CBN Act and began operations on July 1, 1959.

Government: the exercise of political direction and control over the conduct of members, residents, or inhabitants of communities, societies, or other entities.

Leave a Comment

Your email address will not be published. Required fields are marked *

×