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The Digital Tender: A Game Changer?

Game changer
Image Credit: Kabiru Yusuf

2 billion people still lack access to formal financial institutions according to data released by the World Bank. This implies that a wide gamut of individuals across the globe are constantly stripped of their financial rights and left in the shadows. This is true of the sophisticated systems of traditional paper transactions that are rarely encouraging and laden with obscurity. 

With this in mind, it is only right that we outsource innovative channels that will provide the vast majority of people with affordable means to manage their financial lives and grow. This must be acted upon in a bid to maximize opportunities for people to express their financial freedom using a secure, affordable, and qualitative approach. 

Presently, the financial space is abuzz with a ‘fresh’ type of currency. One that is fast gaining momentum and seeks to achieve a satisfactory ambition. Digital currencies in today’s economy have been observed to hold the potential to completely revolutionise how money is perceived in society. The influx of cryptocurrencies such as Bitcoin, Ethereum and a host of others has, over the years, topped off several conversations on the role that these electronic currencies might play and how their seeming prospects could be utilized to foster growth and financial inclusivity. Regardless of the nature of the transition that a country may adopt, it is needless to say that a legally issued digital currency will be a welcome initiative. It will further provide businesses with the avenue to flourish through a safe and timely financial instrument as the digital currency. 

Moreover, with the countless challenges that plague paper currency transactions, digital currency offers a decent consolation. It satisfies the people where they are and augments their monetary options. The inflation rates across Africa are largely dismal. In Nigeria, it stands at a sorry state of 18.2% — and shows no signs of slowing down. A digital currency will surely serve as insurance against uncertain waves. It is simple, seamless and guarantees a decent store of value. Sounds like a smart choice, right? 

Also, a recent report by the Bank of America admits the intrinsic value that digital currencies have in emerging economies if fully embraced. The President of El Salvador, already leading the charge, announced this year on June 5th that he has commenced plans to make digital currencies a legal tender in the country. The acceptance of digital currency by a nation’s central bank will also ensure that transactions are conducted credibly. It will inevitably block leakages and occasions of fraud in the financial landscape. Not only that but there will also be a huge reduction in administrative and operational costs which is incurred by the government. 

On the flip-side, however, several obstacles ranging from volatility, regulatory problems, issues of privacy and trust may hinder widespread acceptance of a decentralised tech–currency. Yet, having a global consensus to fashion a regulatory framework on the digital currency mantra will by far assuage some of these challenges. It is only a matter of time. “There are of course barriers to mainstream adoption, but they are far from insurmountable,” says Iqbal Gandham, the UK Managing Director of eToro.

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