MONDAYBUSINESS ECONOMIC INSIGHT Value of Bitcoin, a burble waiting to burst - Experts
Recently, there has been an increase in the acceptance of digital currency in the country owing to its increasing acceptability as a means of exchange from several online shops.
It is important to note that, Bitcoin is a type of digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank.
Bitcoin is currently worth about $10,500. Due to this huge value, many are encouraging others to invest in the cryptocurrency and Nigerians are slowly but increasingly embracing it in the hope of making huge return on their investment.
Some notable companies that accept Bitcoin include Expedia, Microsoft, Subway, Newegg, TigerDirect, Tesla and PayPal. So, do not be surprised when some Nigerian companies start accepting Bitcoin.
While many financial institutions charge you or take days to process transactions, Bitcoin allows transfers from one account to another almost for free. Of course, you must already have your money in Bitcoin form. There is no need for any middlemen. As a result, the transfer is seamless.
A lot of experts have however come to predict that cryptocurrencies have a bright future as a new way to conduct commerce and business. But that is not the same thing as saying that their value right now is sustainable.
“It’s early days yet, and, while the number of businesses accepting cryptocurrencies is growing, it’s not big enough for most of the demand to be built on legitimate trade. This means that buying cryptocurrencies is speculation, not investment. Hence, you should be willing to lose the money you invest in buying Bitcoin!” Jumia Travel, the leading online travel agency shared, as part of it advisory on the usage.
Following in the same line of thought, Deputy Director of Research, Policy and International Relations (RPIR) of the Nigeria Deposit Insurance Corporation (NDIC), Dr. Sabo Katata, said: “Bitcoin and all the form of coins that are being talked about are not offered by any government. These coins are backed by private individuals and in the case of the bitcoin, no one even knows who, he is only known as Satoshi Nakamoto. And as far as we (the NDIC) are concerned, no central bank in the world has accepted that the bitcoin should be used as substitute for cash to replace the money issued by these central bank.”
Satoshi Nakamoto is the name used by the unknown person or people who designed bitcoin and created its original reference implementation.
Australian entrepreneur Craig Wright has since come out to say he’s the inventor of the digital currency bitcoin. Wright told the BBC that he is Satoshi Nakamoto, the shadowy creator of the cryptocurrency, in a move that could end the yearslong search for the inventor.
Dr Katata went on to say, “The CBN, the NDIC and other regulatory bodies like the Securities and Exchange Commission have told you not to trade on it; it is risky and dangerous, and you will not be protected. If you want to trade unprotected, uninsured and exposed, it is your business.”
Also speaking exclusively to Daily Trust, Lukman Otunuga, an international financial expert said: “It is very difficult to understand the intrinsic value of bitcoin. People ask, what the fundamental driving force of bitcoin is really.
Speaking to CNBC, Vitor Constancio said developments in bitcoin’s price make it “a speculative asset by definition.”