Nigeria: Expert Cautions Against Cryptocurrency Trading

24 February 2021

The Chief Executive Officer, Global Analystics, Mr. Tope Fasua has highlighted the risks in trading in cryptocurrencies.

He also revealed that presently, 60 per cent of central banks across the globe are under pressure to issue sovereign digital currency.

Fasua disclosed this yesterday, at the February edition of the Finance Correspondents Association of Nigeria (FICAN) monthly forum in Lagos, where he spoke on 'Ban on Cryptocurrency-related accounts in Nigeria and concerns of global central banking.'

He also said although no banker to the government would support cryptocurrency, they have no option than to begin to issue their own Central Bank Digital Currency (CBDCs).

Fasua said: "The anonymity of cryptocurrencies means it is a heaven for criminality. You would see that a lot of criminals went into it and a majorly also steal people's wallet. There is an enormous amount of stealing in the crypto world compared to stealing in the fiat currency world and they try to move into cryptocurrencies to try and obliterated their trail.

"About 78 per cent of issued bitcoin are either lost, hoarded leaving less than four million bitcoin to be shared amongst future market and possess a lot of risks also."

According to him, about five countries, namely -China, Ecuador, Senegal, Tunisia and Singapore - have issued digital currencies in a bid to give alternatives to their citizens who seek easier currency conversion.

Fasua stated that the proponents of the cryptocurrency believe that there was a need to push back and do something different, which would mimic the attributes of a gold-backed currency in view of durability and scarcity, but better than the current system by being smart, secure and not possible for central banks to issue at will.

He added: "If it started as a rebellion, then you must think of the incentive for the global economy to sign on to that rebellion with you against the devil they know. This then means that until there is global acceptance of the currencies, it will continue to be easy to create panic in the crypto world and big players can dump the currency when they have achieved gains.

"It then becomes worse than the stock market because, for cryptocurrencies, the fundamentals are non-existent apart from an analysis of how many are adopting the currency and who is winning between an established traditional banking system and the new kids on the block."

According to him, Cryptocurrency is heading to global single currency but one major challenge is that there is a lot of loses in it and that when most coiners die, no one is able to access their investments which ab initio are encrypted with passwords, passphrases and whatnot.

"People don't usually plan to die. Now, this is where regulation helps in the financial markets. Apart from deposit insurance, which kicks in, in the event of the collapse of an insured and regulated financial institution, the relations of a dead account holder in a traditional bank could still have access to their balances," Fasua stated.

... Bitcoin's Price Tumbles after US Regulator's Concern

Bitcoin tumbled Tuesday from its record-breaking run after US Treasury Secretary Janet Yellen warned that the, "highly speculative" unit could be used for "illicit" purposes.

At about 1500 GMT, the digital currency slid 12.57 percent to $47,946, while rival ethereum declined 15 percent to $1,539.

Tesla boss Elon Musk -- whose company has invested heavily in bitcoin -- tweeted Saturday that the prices of both cryptocurrencies "seem high".

Yellen hit out Monday over bitcoin, claiming it was inefficient and required a vast amount of energy -- and she expressed fear it was used for "illicit" reasons.

"I don't think that bitcoin... is widely used as a transaction mechanism. To the extent it's used, I fear it's often for illicit finance," the AFP quoted her to have said at an event hosted by the New York Times.

"It's an extremely inefficient way of conducting transactions. And the amount of energy that's consumed in processing those transactions is staggering.

"But it is a highly speculative asset, and I think people should beware. It can be extremely volatile, and I do worry about potential losses that investors in it could suffer."

Tuesday's slump came after bitcoin had blazed a record-breaking trail to peak at $58,350 on Sunday.

The total value of all bitcoin had surpassed $1.0 trillion on Friday.

One week ago, bitcoin blasted past $50,000 after Musk's electric carmaker Tesla revealed it had invested $1.5 billion in the unit.

Bitcoin also vaulted higher in recent weeks after corporate giants -- including investment fund BlackRock, New York bank BNY Mellon and credit card titan MasterCard -- embraced the digital unit.

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