Cryptogram

Why Nigeria should embrace digital currencies - Elofusim

By Zakariyya Adaramola | Publish Date: Jan 8 2017 2:00AMIn this interview with some journalists in Abuja, the Managing Director of TSP Capital Limited, a foreign portfolio investment advisory firm, Mr Peter Elofusim, speaks of opportunities in adopting digital currency.
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Why should people be interest in digital currency?

The reason digital currency or Bitcoin came into existence and has stayed till today and why the people should go for it, is that, it is not affected by socio-political events.  It is finite. This meant that the technology is called Blockchain which controls and creates digital or crypto currency and can only produce a finite amount of coins. It means that once that technology is in place, nobody can mint more. That is why if you store your wealth in crypto currency, you’re sure that it is not going to face devaluation as a result of minting of more currencies.

Another reason why it is the best way to store your wealth and assets is that, it is not controlled by any government or money regulatory institution. The only thing that affects digital currencies is the demand and supply. If you store an asset in digital money you can go to sleep and be rest assured that it will keep appreciating.

If digital currency is not controlled by financial regulatory institutions, what role will banks play in it?

This may sound too far-fetched but banks will close shops in the next 10 to 15 years if they fail to key into the scheme. This is because individuals and businesses are looking for transactions that do not impose any charges on dealings and are more instant. Presently, international transactions are not instant, but when it comes to digital money, if one makes payment to a vendor, it is received immediately.

Also, digital money seeks to take away the middleman by making you your own banker. So, as a result there are no extra charges connected to transactions. If you look all over the world, you will discover that governments are beginning to scramble to conform to digital or crypto currency. I am glad that I heard the Managing Director of Nigeria Deposit Insurance Corporation, recently say that the federal government had set up a committee to study crypto currency and how to adopt it. Senegal has already adopted this technology.

Is Bitcoin the only form of digital currency?

It is not the only one, there are many digital monies. There are Litecoin and Onecoin. They are universal currencies that are not controlled by any government or central bank. But, we are promoting Onecoin because Bitcoin was created on an experimental level. It does not put certain measures in place to make sure it stand the test of time. The inventor lost control when it became a success. When Bitcoin was created, the issue of Know Your Customer (KYC) was not put in place. There were no tracking instruments to know who used the currency for transactions, so it was abused. This gave Bitcoin a negative vibe but it was taken care of in later years.

Onecoin has put in place measures to mitigate the shortcomings of Bitcoin. First of all, from day one before you can acquire Onecoin, you must first of all fill out the KYC and supply your biodata. Unlike Bitcoin, in Onceoin, everybody enters their mining pool, so you don’t need to be technology or IT savvy. Onecoin is at the initial stage of creation and it will go public around 2018. So, the opportunity to recreate the kind of wealth that was witnessed in Bitcoin exists in Onecoin.

How would you describe money as a means of storing value?

Money as a means of exchange has been evolving way back. It is as old as man. We started from trade by barter and moved to coins and cowries and to paper money. Presently, we have plastic money, which is, the ATM card. But, the thing about it is that there is what businesses and individuals are looking for which money in its present form does not have. In economics, we are told that money is a store of value but the truth about it is that, money stores value at the point of exchange, at the point of conversion of goods into money, however as days go by, the value is lost due to depreciation and devaluation. So, a lot of things affect money as we know it.

Today, the present state of money is called fiat money. The thing about fiat money is that though it is a store of value, it fails to maintain that storage of value over a period of time. Every fiat money is subject to socio-political events, any negative socio-political events in a country affects value of stored money. Socio-political happenings affect the value of money and body language of the leaders of the country affects the money. So, essentially what I am saying is that a leader or top echelon of an administration can make a careless statement that could possibly affect the value of money.

This aggregates into a substantial form over a period of time. This simply means that money in its present form does not provide a safe haven to store wealth and assets. However, digital money allows for a relative stability in the storage of value. Also, any money that does not have finite amount, that can be printed like fiat money cannot have a strong value, it does not provide a relative stability in storage of value. These are the bane of fiat money.

So, what will you say is the answer to this? How can people and businesses store money and ensure its value does not depreciate?

It is in answer to this that made businesses to be looking for what can be used as a means of storing wealth and assets. A situation, you can wake up and know that the value remains stable or at best improves or increases. This is what led to the emergence of digital currency or crypto currency.

In 2008, the financial crisis in America was at its worst point. In fact, you can say that money failed in America in 2008. It was at that point that Satoshi Nakamoto came up with the idea of digital money, so the first digital money, Bitcoin, was finally invented in 2009. It was invented at the time when the US dollar which was the world’s reserved currency failed. At the initial stage, Bitcoin can only be acquired by solving a set of mathematical equations that were running on digital algorithms.

Those digital coins were exchanging for one Bitcoin for 10 cents. Now, from 2009 to 2012 the value of Bitcoin moved from 10 cents per coin to $1,200. What this essentially means is that people that invested in Bitcoin led to the emergence of so many millionaires.

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