Despite being touted as the future of currency, the CBN has banned banks and discouraged people from trading in digital currencies for a number of reasons.
In the last few months, the government has been quick to let citizens know that is fully against any transactions in virtual currencies.
Most Nigerians were introduced to them when the highly popular Ponzi scheme, MMM announced that it was planning to pay its members in Bitcoin.
It may seem like another plot to strangle innovation in its crib but there are genuine issues surrounding the use of bitcoin and similar virtual currencies.
1) Bitcoin is very prone to theft. The system has imperfections that more sophisticated internet criminals take advantage of. The passwords (or private keys) that protect bitcoin accounts are often stored in publicly accessible databases like bitcoin exchanges or cloud drives.
Hackers access these keys and use them to syphon funds. One minute, you’re admiring your countless bitcoin on your PC screen, next minute, issa disappearance.
2) A large number of the companies that deal in bitcoin are actually fronts for illegitimate and fraudulent activities. The system is new and unregulated so it’s easy for new brands to come with wild promises.
In the early 2010s, Bitcoin Savings and Trust, an ‘investment fund’, drew much attention by paying outlandish profits to early investors. Can somebody say MMM? It turned out to be a Ponzi scheme, taking 4.5 million dollars worth of bitcoin when it crashed.
3) The price of Bitcoin is very unstable. Although it is the most used and exchanged virtual currency, it is very prone to wild changes in value, mostly in response to external factors
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