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Inside Nigeria’s vibrant crypto and blockchain community; how it all started

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In 2016, the MMM Ponzi scheme, whose fame had been prominently spread across Nigeria, shattered the finances of many Nigerians after it experienced an abrupt failure that led to the loss of billions of naira. The collapse of MMM in Nigeria, triggered the birth of a new technology revolution in the country—blockchain. 

Blockchain Nigeria User Group Meet-up at Jelurida Africa, Lekki Lagos Island
Blockchain Nigeria User Group Meet-up at Jelurida Africa, Lekki Lagos Island

Few years before MMM collapsed, in 2008, a novel technology known as blockchain, was developed by Satoshi Nakamoto, to serve as the public transaction ledger of the cryptocurrency, Bitcoin. The bitcoin would later popularize blockchain in Nigeria, after the crash of the MMM Ponzi. After MMM crashed in 2016, the attention of many Nigerians was drawn to a new innovation, the bitcoin, that could facilitate a better and more flexible means of financial exchange, and also increase their income. Contrary to public expectations, the collapse of MMM did not entirely scare people away from cryptocurrencies and Blockchain technology. It, instead, helped bitcoin and Blockchain technology gain significant traction in the country.

Before 2016, there was no active blockchain community in Nigeria. Despite the fame the bitcoin received after MMM crashed, many Nigerians were still oblivious of what blockchain technology entailed. The emergence of a vibrant blockchain ecosystem in Nigeria was pioneered by a few key Nigerians, including Chuta Chimezie who is the founder of the Blockchain Nigeria User Group. 

Chimezie Chuta
Chimezie Chuta / Flickr

The founder, Chuta Chimezie, recounts that he stumbled on the word, “blockchain”, while he was exploring his interest in 3D printing. As he recalls, “I was curious. What are 3D printing and blockchain doing together? So, I decided to find out about blockchain.” The blockchain journey began for him, when he enrolled in the 2016 edition of a blockchain course by University of Nicosia, Cyprus. Interestingly, the course had only 5 African participants, which portrayed a need for pioneers like Chuta to lead the development of an African blockchain ecosystem. Alongside a few of his friends, Blockchain Nigeria User Group was created in 2016, to spur the growth and development of blockchain in Nigeria. The platform has immensely contributed to shaping the blockchain community in Nigeria. In August 2017, the organization organized one of the very first blockchain conferences in Nigeria. This, and many other initiatives like it, have promoted the education of Nigerians about blockchain.

Lagos Blockchain & Digital Assets Conference 2019. – Organised by Blockchain Nigeria User Group
Lagos Blockchain & Digital Assets Conference 2019. – Organised by Blockchain Nigeria User Group

As the blockchain conversation in Nigeria waxed stronger, the industry began to see the birth of disruptive innovative startups like the cryptocurrency remittance service provider, SureRemit, which was launched in 2017. In 2018, several other blockchain startups joined the Nigerian blockchain industry, including Bitmama, KubitX Limited, Coinbarter and Terra Foundation. In the same year, Nigeria was among the top African countries with the highest number of new bitcoin users.

The rapid evolution of Nigeria’s blockchain community prompted the development of BlockchainDev1000, an initiative powered by the Blockchain Nigeria User Group, created to develop 1000 blockchain talents within 2 years. The initiative is in partnership with major stakeholders within the blockchain industry, including IBM West Africa and Hyperledger, and has enrolled about 560 participants since the program commenced. “Adoption of blockchain technology in Nigeria, is not going to happen overnight because it requires a new set of skills,” says the founder of the Blockchain Nigeria User Group. Initiatives like the BlockchainDev1000 are taking up the responsibility of enabling blockchain adoption by equipping Nigerians with the skills required to function in the blockchain space.

Blockchain Nigeria User Group Meet-up 2019 (Chimezie Chuta/Medium)

2019 marked a redefinition of the blockchain landscape in Nigeria. In 2019, Nigeria peaked as the one of the countries with the highest volume of crypto-related searches, particularly bitcoin, in the world. As the interest grew, crypto-oriented applications gained wider prevalence in the Nigerian financial sector. “I like to refer to cryptocurrency as the first fruit of blockchain in Nigeria,” says Chuta. In the same year, prominent Nigerian crypto trader, Gaius Chibueze, was ranked, globally, as one of the top traders on Binance, which is one of the world’s largest bitcoin exchange platforms. The birth of blockchain startups also continued to experience an increasing surge with the launch of blockchain startups like Paychant, MultiSend and Agriblock. 

A lot of progress has been made since the inception of the blockchain ecosystem in Nigeria and regulations are now being put in place to encourage the adoption of blockchain technology. The Security and Exchange Commission (SEC) regulation that was announced in September 2020, has proposed a regulatory framework for crypto assets and investments, and blockchain technology in general. This is a huge encouragement to the growth of Nigeria’s blockchain sector, as there was no clearly defined regulation before it. “The SEC document will go a long way in giving  investors the right mindset,” says Chuta. “The Security and Exchange Commission, which is the watchdog of the Nigerian capital market, has recognized the crypto asset class as a commodity, and these are the things that the capital market players have been waiting for. I believe that this policy document will galvanize the industry into the direction of mass adoption.” Currently, the Nigerian blockchain community is collaborating with the National Information Technology Development Agency(NITDA) on a policy document to standardize and regulate the Nigerian blockchain industry. 

Beyond the very short term, the future of blockchain in Nigeria is highly unpredictable because of its extremely rapid growth. “Blockchain technology is a rapidly evolving technology. A ten year prediction is something nobody can imagine,” says Chuta. Nonetheless, one thing is certain, and that is the fact that blockchain is here to drive another industrial revolution in Nigeria. With proper regulations now being put in place and the increasing interest of Nigerians in the technology, the growth of its ecosystem within the next two years, will be much more rapid than has been previously experienced.

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Jack Dorsey‘s Square to develop open source Bitcoin mining

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Jack Dorsey Bitcoin

On Friday, October 15, Twitter CEO Jack Dorsey announced that American fintech company, Square, would be looking to get into Bitcoin mining. Jack Dorsey who is also Square’s CEO announced this on Twitter which subsequently sent waves through the bitcoin market, surging its price to almost a record high, rising over $62,000 over the weekend. According to the Twitter boss, Square is looking to building an open source Bitcoin mining system that would be available to individuals and businesses.

Sharing his thoughts further on the initiative, he stated that “Mining needs to be more distributed” and that “the more decentralized [mining] is, the more resilient the Bitcoin network becomes. He also mentioned the apparent inaccessibility of mining stating that “Bitcoin mining should be as easy as plugging a rig into a power source.

Dorsey also believes that bitcoin mining “needs to be more efficient and that “clean and efficient energy use” would be undoubtedly beneficial to the digital currency in the long run.

Dorsey ended the thread by saying that a “technical investigation would be undertaken by a Square team led by Jesse Dorogusker, Square’s hardware lead. If successful, this initiative would be another of Square’s bitcoin focused projects which includes a Bitcoin hardware wallet.

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Financial Leaders from G7 Release Guidelines for Central Bank Digital Currency

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Source: World Atlas

At a meeting that was held in Washington, yesterday, October 13, G7 leaders discussed central bank digital currency and endorsed 13 public policy principles with regards to their implementation. The financial leaders from G7 agreed that CBDCs would complement cash and should not be detrimental to the monetary system. The G7 leaders have been discussing CBDCs this week concluding that they should do no harm and meet rigorous standards.

It should be noted that G7 includes finance leaders in advanced economic nations comprising of Canada, France, Germany, Italy, Japan, the U.S and the U.K. the G7 leaders make it mandatory that any newly launched CBDC should not harm the central bank’s ability to perform its duty of maintaining financial stability. In a joint statement by the G7 finance ministers and central bankers, they said that, 

“Strong international coordination and cooperation on these issues help to ensure that public and private sector innovation will deliver domestic and cross-border benefits while being safe for users and the wider financial system.” 

The joint statement further states that CBDCs are complements to cash and could serve as a liquid or safe settlement assets with an added advantage of anchoring existing payment systems. CBDCs issuance should be entrenched in a long-standing public commitment to transparency, rule of law, and sound economic governance. The statement added at CBDCs must be so efficient that they are fully interoperable on a cross-border basis. 

The G7 leaders agreed that they had a duty to minimize the incidence of ‘harmful spillovers to the international monetary and financial system” 

The G7 statement reiterated a similar statement earlier made by G20 that no global stablecoin project should begin operation until such a token has addressed legal, regulatory and oversight requirements. 

Countries like China and Nigeria are ahead of the pack with regards to the adoption of digital Yuan and Naira respectively. China’s crackdown on cryptocurrency may be a step forward for the country’s plan to promote its digital Yuan. Nigeria, on the other hand, postponed the launch of its eNaira in deference to the 61st anniversary of Nigerian independence on Oct 1. 

However, countries like the US and the UK are dragging their foot with regards to the introduction of CBDCs to their financial system. There are insinuations that America is in danger of being left behind technologically and financially if it doesn’t get serious with the implementation of CBDC in its financial system.

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Learning Guides

Understanding Speculation and Crypto Volatility

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Everyone who dabbles in the crypto industry learns almost immediately that the market is very volatile and oftentimes things can change very quickly. That volatility is the fundamental reason why some investors make absolutely stunning gains in so short a time and others lose a lot of money as well. Trading in crypto is one of the riskiest ventures any person can undertake and as they say, it’s not for the faint of heart. The risks can be mitigated of course and sometimes depends specifically on the coin or crypto asset being traded on, barring general market trends.

Nevertheless, to get to the bottom of the volatility concept, one must understand speculation in the market. To start off, the concept of speculation isn’t limited to cryptocurrencies, on the contrary, speculation has existed for as long as economics and trading has. But it is worth saying that speculation is often a feature of novel sectors, assets, commodities and the like. So, even though cryptocurrencies have been around for more than a decade, they’re still in their infancy as far as markets go. One could say that the market is still trying to find its feet.

One of the fundamental reasons why cryptocurrencies are so volatile is that they are fundamentally backed by nothing of value outside the attention that they get. Unlike many fiat currencies which are either pegged to another currency’s value or whose value is unilaterally determined by a central authority, cryptocurrencies only derive value as a function of how many people are willing to use is to transact, i.e. trust in the asset because other people trust it. As a rule of thumb, the larger the number of people who accept the asset, the more valuable it becomes.

This is one of the hallmarks of speculative trading. In the crypto world or in any market that’s novel and untested, many people are in it to win it which means their strategies in trade has the objective of making as much profits as possible in the short term. Therefore, the market enters a subtly dangerous cycle of rapidly changing prices of assets. Basically, investors typically buy assets when prices are low and wait. As more investors are attracted to the commodity for its low prices, it sets off a cascade where more people buy in, causing the price to steadily rise. 

However, all good things must come to an end and it almost always gets to a breaking point whereupon the price gets high enough for investors to begin to sell. This reverses the earlier cascade and as more and more investors pull out, the prices can fall dramatically causing even more to sell off in fear of losing whatever investments they have left. The prices having fallen resets the game and primes investors to begin buying again.

Volatility has been one of the talking points of many critics of cryptocurrencies often comparing it to a Ponzi scheme. And in certain cases, persons of interest with large pulls and audiences can substantially affect the rate at which prices rise and fall. Other factors include government regulations. Volatility at its core reflects the often chaotic nature of trade and market interactions and human hopes and fears.

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