Bitcoin Price Spikes to $1,600 in Nigeria

 

Nigeria’s Bitcoin Price is Going Crazy

Nigeria is displaying an insatiable appetite for bitcoin right now. NairaEx, one of the leading cryptocurrency exchanges in the country, is trading BTC at nearly US$1,600 each. Considering how the market average is just above US$1,10 right now, the situation raises a lot of questions. Bitcoin is being embraced by the Nigerian population by the look of things, even though no one is quite certain as to the exact cause for this sudden demand.

It is not uncommon to see certain regions of the world trade bitcoin at slightly higher prices. China, for example, has paid a 5% premium for bitcoin for as long as people can remember. Indian exchanges have gone through a similar situation when the demand for bitcoin was met with low liquidity. Nigeria, however, is doing things very different from those countries, as their bitcoin premium price is much higher than one would expect.

To be more precise, trading bitcoin at NairaEx will currently cost traders 494,755 Naira. A quick currency conversion tells us that is equal to nearly US$1,600 at current rates. That means Nigerian traders are  – willingly – paying a near US$600 premium per bitcoin right now. Although this bodes well for cryptocurrency valuation in general, one does wonder what is driving this sudden demand. Moreover, it is unclear why such a steep premium price is not slowing down the demand right now.

A few days ago, it was clear the weekly bitcoin trading volume in Nigeria was on the rise. Just last week, over US$1.3m worth of bitcoin was traded in Nigeria – according to Trail Blazers Nigeria – which is quite a staggering amount. Do keep in mind this volume only represents LocalBitcoins trading and does not take exchange volumes from NairaEx into account. Interestingly enough, the current LocalBitcoins price for bitcoin is nearly the exact same as the one found on NairaEx.

Finding an explanation for this sudden development is not easy, though. Nigeria has seen an uptake in internet and technology use over the past few years, which could eventually lead to increased cryptocurrency adoption. However, there is also the threat of MMMGlobal, which now only accepts bitcoin as a payment method. Even though a lot of people know MMM is a Ponzi Scheme, Nigerians continue to invest bitcoin into this program.

Perhaps the biggest mind shift comes from the growing number of merchants accepting bitcoin payments in Nigeria. Thanks to companies such as BitPesa, it becomes easier to use cryptocurrency for everyday needs. The company recently launched a new feature allowing Nigerian businesses to transfer funds to Chinese partners over the bitcoin network. More efficient payment solutions will lead to a booming economy, all of which is made possible with bitcoin right now.

Last but not least, the local media are paying more positive attention to bitcoin as well. An article about Satoshipay surfaced on the Nigeria Today website yesterday, explaining how anyone can make money with bitcoin. All signs are pointing toward a bright future for bitcoin in Nigeria, even though it remains to be seen if these high premium prices will be sustained for long.

Chuck Reynolds
Contributor

Alan Zibluk – Markethive Founding Member

 

Bitcoin – you might have heard about this digital currency, and it’s gaining some traction in payments. Online retailers like Newegg and Overstock.com accept it. There are services that let consumers convert Bitcoin into gift cards for use at their favorite retailers. And beyond that, bitcoin doesn’t seem to be going away.

Bitcoin, however, is but one piece of the conversation about emerging technologies such as blockchain and distributed ledger technology, thus it helps to first start a conversation about these concepts. You might even be more curious to learn how blockchain and Bitcoin might feature in the future for your business.

What is blockchain?

The easiest way to understand blockchain is to think of it in terms of a typical bank account. When you spend money, it’s recorded as a transaction in your bank account, right? It’s the same thing with bitcoin or other industries using blockchain technology. A transaction is recorded in a “block.” Think of blocks like your monthly statements, which neatly divide up your transactions for easy reference (month, date, time, vendor, amount, credit or debit). A set of transactions is recorded as a block once it?s been verified by distributed trusted parties.

Once a block of transactions is complete, they become part of the blockchain. They are linked together in proper order (both chronologically and in a linear fashion), and each block links to the block before and after it in the sequence – much like your bank statements for each month showing a starting and ending balance. Blocks are impossible to alter once they’re part of the blockchain, which can create a more trusted, unchanged record of transactions or data that a large network of parties can see and verify.

How does blockchain work within the use case of currency?

To understand how virtual currencies such as bitcoin and other blockchain-based systems work, we have to have a look at credit/debit transactions and cash. Credit/debit transactions are what are referred to as “pull payments.” A merchant terminal (virtual, i.e. online, or physical) processes a customer’s credit card using all of the encoded information and then decides how much money to “pull” from a customer’s account to satisfy a purchase.

Cash, and bitcoin are “push” forms of payment. In every bitcoin and cash transaction, a customer decides how much money to hand over to a merchant to satisfy a purchase. There’s no exchange of sensitive personal information, such as what’s found on a plastic card. Bitcoin and cash are not reversible and each can only be refunded by the holder who is initiating a return. This means that bitcoin and other forms of payments powered by blockchain technology are more like cash than even a debit transaction. It also means that industries outside of payment technology are taking notice of how the foundation, blockchain, could help better manage data and information.

How is blockchain being used outside of payment processing?

The mortgage title industry and diamond industry have begun leveraging blockchain technology to solve some of their most critical challenges. According to a January 2016 report by NASDAQ, these two industries are taking advantage of blockchain technology in a few ways.

The diamond industry has long faced challenges around fraud relating to the certification of diamonds, which can dictate the value of one diamond over another. Blockchain technology allows for the recording of diamond certification and for that information to be immutable and shared between insurers, law enforcement, and those who are filing claims. For the real estate sector, title fraud is also a rampant problem. By recording property titles using blockchain technology, title insurance companies can save millions each year fighting title fraud, because titles become permanent and in historical record once they are part of the blockchain. There are other pending applications for medical technology (such as sensitive patient medical information) and the credit ratings industry as well.

What’s next?

Blockchain technology has been gaining attention for some time, and several industry consortiums have developed to track and innovate with the technology and identify applications for it in business. Just a segment of these groups includes R3 and Chain, two consortium groups, and consulting specialist groups such as SolidX. Ultimately, it will take many factors to determine the applications and use cases of blockchain technology in the coming years, but it has become a promising mechanism for data management, record-keeping, and payment processing in its early stages.

Chuck Reynolds
Contributor

Alan Zibluk – Markethive Founding Member

How blockchain can be a force for good in the developing world

Blockchain is a digital architecture most commonly known as the technology behind bitcoin, the virtual currency. A number of its applications have particular relevance to the developing world.March 17, 2017 —Anita is an in-home care nurse in the United States. Each month she sends a portion of her earnings to relatives back in the Philippines. These monthly gifts ensure that Anita’s two nieces can afford new clothes and school supplies, that her father can pay for quality healthcare, and that her brothers won’t have to worry about covering the costs of the family farm after an unusually harsh season.

Meanwhile, Anita’s monthly support means serious dollar signs for money transfer companies like Western Union. In 2015 alone, migrant workers sent an estimated $582 billion to relatives back in their home countries. With average fees of around 8 percent for international money transfers, the global remittance market has become a reliable cash-cow for traditional financial institutions.

While a $10 transfer fee might not sound like much, it represents nearly three times the daily cost of food for an entire low-income Filipino household. Thinking of all the uses her family might have for an extra $10 each month, Anita recently decided to switch to Abra, an online money transfer service that uses cutting-edge technology to perform secure transactions without any of the typical fees imposed by financial intermediaries. Abra – like Hong Kong-based OKLink or BitPesa out of Nairobi – is just one of a growing number of international money transfer companies that stand poised to upend the global remittance market by using blockchain, a digital architecture most commonly known as the technology behind the virtual currency, Bitcoin.

But what is blockchain?

In broad strokes, blockchain is a way to securely record transactions in a distributed digital ledger. This distributed ledger shifts the responsibility of verifying transactions from a single trusted authority, like a bank for example, to a shared effort involving every participant in a network. By allowing users to conduct secure transactions with one another directly, blockchain eliminates the need for regulatory middlemen. This allows companies like Abra to save time and money by avoiding the lengthy processing periods and fees imposed by traditional money transfer services.

Even more exciting is that companies like Abra are using blockchain to promote financial inclusion. By allowing unbanked individuals and communities to send and receive cash directly, blockchain-backed transfer services reduce the barriers that keep many of the world’s poor from gaining liquidity. Unsurprisingly, blockchain is rapidly proving to be a powerful force for good in the developing world, and disrupting the remittance market is just the tip of the iceberg. The distributed ledger at the core of blockchain has a dizzying number of applications outside of finance. While national governments have begun experimenting with blockchain-backed land registries, fresh players in the development world have started to explore alternative uses for immutable records and self-enforcing contracts.

Many of blockchain’s potential applications in the development world deal with streamlining internal operations. For example, an Italian startup called Helperbit is using blockchain to rein in the lack of transparency that often hampers disaster relief efforts. By using a distributed ledger to allow donors to monitor the allocation of their funds, Helperbit stands to promote accountability in the nonprofit sector while encouraging would-be donors to get involved. Meanwhile, a host of companies are putting blockchain to work in the field. Provenance, headquartered in London, is using blockchain to shed light on global supply chains and promote socially responsible and sustainably sourced products. A recent pilot study tracked Indonesian yellowfin and skipjack tuna from “catch to consumer” to demonstrate how blockchain can be used to verify sustainability claims and combat rights abuses in the international fishing industry.

Operating in a similar vein, the Brazilian lumber exchange company BVRio recently adopted blockchain backed timber registries to discourage illegal logging operations. The new blockchain registry provides an accessible toolkit for due diligence, encouraging sustainable sourcing in an industry long fraught with violations of environmental law. Like most disruptive new technologies, blockchain has its fair share of critics. Observers in the development sector are right to point out that blockchain’s uses might be seriously hindered by poor energy infrastructure and unreliable internet connections, conditions that frequently affect communities in the developing world.

Still, many of these claims may be overblown. As the market warms and the technology gains traction, blockchain-based services are becoming increasingly accessible to individuals in remote and technologically strained environments. Consider that multiple blockchain-backed currency exchanges can already be operated by SMS alone. With a little instruction, someone in sub-Saharan Africa equipped with nothing more than a pre-paid Nokia cellphone can benefit from blockchain.

Chuck Reynolds
Contributor

Alan Zibluk – Markethive Founding Member