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CBN, Experts Say Bitcoin is Dangerous Scam

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Central Bank of Nigeria (CBN) has warned Nigerians and financial institutions to stay away from bitcoin and other digital currencies.

 

Experst also said that when bitcoin inevitably crashes, inexperienced investors who believed the hype could lose everything.

 

In Nigeria, CBN said the virtual currencies are not legal lenders in Nigeria and are unacceptable.

 

The bank called on financial institutions not to transact businesses in the currencies and anyone who does such, is at its own risk.

 

Digital currency bitcoin sold at $1000 in January 2017 and hit an all-time high of more than $19000 in December.

 

Currently, the price of bitcoin has been stagnated in the last two weeks and financial experts around the world continue to discourage investors.

 

Experts however said that Bitcoin’s price is not a reflection of its growing usage as currency; it reflects merely demand for the mirage of its speculative value.

 

Its price is rising only because people all over the world are hearing stories of how others doubled or tripled their money in a short period — and they don’t want to miss out. Unsophisticated investors are taking out loans to buy bitcoins. Those who have spent the currency feel remorseful when they see its price subsequently increase, so they hoard it.

 

Bitcoin was invented by an unknown person or group to be a digital currency. It allows money to be transferred directly between individuals using cryptography. The bank ledger is distributed to all users, and complex mathematical transactions ensure transaction integrity. Such a system makes it difficult for governments to know the identities of people exchanging money, so it has become a haven for money laundering, drug dealing, and corruption.

 

Beyond its usability for crime, bitcoin has major design flaws.

 

Bitcoins are created (or “mined”) at predetermined and gradually decreasing rates, with a total limit of 21 million issuable coins. The rate of increase in available bitcoins is not keeping pace with the number of people keen to buy them, so the price of a bitcoin keeps increasing. Because its price increases, both its “miners,” whose computers do complex calculations to earn the currency, and those who buy bitcoins from others feel reluctant to use them as currency by spending them. Instead, they sit on their coins while they wait for the price to rise further. With bitcoin supply constrained and increasingly falling short of demand, instead of functioning as a currency, bitcoin is a speculative empty asset.

 

Then, there are problems with the technology itself.

 

First, anyone who has access to a bitcoin password (or private key) has the authority to spend the bitcoins it unlocks; loss of the password means loss of all of the associated bitcoins, with no recourse. Second, linear growth in the chain of blocks that make up bitcoin is resulting in exponential growth in the computation necessary to process and verify transactions: Transactions that used to take 10 minutes now take hours. Third, with bitcoin transaction fees hovering above $25, a $5 payment now costs $30. This obviously is not a workable digital currency.

 

What is most worrisome for the planet is the energy expenditure that verifying transactions now requires. The bitcoin network is reportedly consuming energy at an annual rate of 32TWh — about as much as the entire nation of Denmark. Each transaction consumes 250kWh, enough energy to power an average Western home for nine days. China has become the dominant bitcoin-mining nation, with its provinces providing ultra-cheap energy to miners.

 

Digital currencies surely are the future, but other options make more sense than bitcoin. Take China’s WeChat Pay and Alipay, which now process $5.5 trillion of payments. Or India’s Unified Payments Interface, which makes it possible to transfer money between people within seconds — for no fee. This occurs bank to bank, provides customer support and security, and has little overhead. So there are better and simpler ways.


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Nigeria CommunicationsWeek believes that technology makes life more exciting and helps improve the lives of people around Nigeria and indeed the world. So since 2007, we have devoted our energy to independent reportage of technology and how they affect lives.

E-Financial

Lagos State Appoints MoneyMaster as Payment Partner for “Ounje Eko” Programme

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“Ounje Eko”, the food price discount initiative of the Lagos State Government, has appointed leading payment service bank, MoneyMaster Payment Service Bank Limited (MMPSB), as its collaborator in the bid to ensure ease of payments at the market.

MoneyMaster is one of the Central Bank of Nigeria-licensed Payment Service Banks (PSBs) to promote financial inclusion across Nigeria.

Under the partnership, MMPSB will apply its cutting-edge payment solution to engender easy payment and reconciliation in order to make   the experiences of Lagosians who will be getting their food supplies from the markets pleasurable. Its payment solution is also all-encompassing and ensures real time value to payment destinations.

The mobile bank was appointed as the collection and payment partner for “Ounje Eko” Food Markets programme which is a government initiative serving the five divisions of Lagos State. Consequent on this, MoneyMaster Payment Service Bank will collect payments in 57 LCDAs in the state.

The partnership gives credence to the quality of payment solutions that MoneyMaster is reputed for in its services to its growing business clientele in private and public sectors.

 


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E-Financial

CBN, EFCC Probe Banks, Firms over Alleged Forex Racketeering

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Central Bank of Nigeria (CBN), is investigating irregular foreign exchange transactions and forward contracts valued at approximately $2.4 billion.

CBN, EFCC Probe Banks, Firms over Alleged Forex Racketeering

The  inquiry follows an extensive audit by Deloitte, which scrutinized $7 billion in dollar debts accumulated under the bank’s previous leadership.

In the aftermath of the 294th Monetary Policy Committee meeting in Abuja, Yemi Cardoso, governor of CBN,  disclosed to journalists that the investigation, supported by the Economic and Financial Crimes Commission, among other security bodies, aims to clarify the legitimacy of these FX allocations identified as problematic by the audit.

“It was determined that a number of these transactions did not qualify…they were outright illegal. The law enforcement agencies are now looking into those transactions that as far as we are concerned, are not valid to be paid,” Cardoso detailed, emphasizing the unlawful nature of these forex deals.

The crux of the investigation lies in the audit findings that a significant portion of the scrutinized transactions lacked proper documentation and, in many instances, were deemed outright illegal.

However, the unfolding investigation has raised concerns within the organized private sector, with some entities contemplating legal action against commercial banks for unresolved forex bids.

Despite these tensions, Governor Cardoso reassures that the foreign exchange market remains open and transparent, inviting stakeholders to address their forex needs through the official channels.

Furthermore, Cardoso clarified the distribution of fertilizers to farmers as a one-off measure and not indicative of a shift back to direct interventions by the CBN, underscoring a commitment to strategic, regulatory governance rather than direct market involvement.

 

 

 

 

 

 

 

 


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CBN Urges Banks to Expedite Action on Recapitalisation

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Central Bank of Nigeria (CBN) has directed deposit money banks in the country to expedite action to increase their capital base from the current ₦25bn.

CBN Urges Banks to Expedite Action on Recapitalisation

Olayemi Cardoso, governor of CBN

Olayemi Cardoso, governor of CBN, stated this during the apex bank’s 294th meeting of the Monetary Policy Committee (MPC) on Tuesday in Abuja, when the MPC hiked the interest rate by 22.75% to 24.75%.

The apex bank chief said the MPC examined developments in the banking sector and expressed satisfaction that the industry remained stable. The committee, however, said to guard against risk, commercial banks in the country should accelerate their recapitalisation efforts.

Cardoso said, “The MPC also reviewed developments in the banking system and noted that the industry remains safe, sound, and stable. The committee thus called on the bank to sustain its surveillance and ensure compliance of banks with existing regulatory and macro-potential guidelines.

“The MPC also enjoined the banks to expedite actions on the recapitalisation of banks to strengthen the system against potential risks in an increasingly globalised world.”

 

 

 

 


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