According to a recent survey carried out by the Research & Development team at Coinnest Africa, 38% of crypto enthusiasts believe that crypto is a big threat to the local currency (Naira).
More than 60% of the survey respondents feel that the recent move by the Central Bank of Nigeria to stifle crypto operations in the country was bad, ill-planned, and should have been more a regulatory move rather than an outright ban.
In the words of one of the respondents;
“Have you noticed that more and more online businesses seem to state that they will accept Bitcoin as payment?
Wholly banning such a growing and potentially huge industry is heavy-handed and undiscerning, to say the least.”
Another also opined that although the CBN’s intention was welcome, its approach needed to have been more strategic.
“I think that the CBN’s intention or reason behind their recent policy against crypto is a welcome idea, when you consider the fact that Cryptocurrency trading has served as a medium for increased fraudulent activities, money laundry and illicit/unaccounted capital importation. Nevertheless, I think there should have been a more strategic way of managing the challenges and threats that crypto trading poses on the economy at large.”
It is no gainsaying to state that a major shift has happened and is still happening globally, changing how people can do business and make transactions. Value and money as we know it is now exchangeable outside of traditional banking institutions.
People no longer need to go, cap in hand, to a bank if they need financing. Peer-to-peer networks, including those based on cryptocurrencies, are becoming more common and those who might be turned away by banks now have another way around financing.
Recently, a Nigerian Fintech startup attained the status of Unicorn when it reached a total valuation of over $1Billion, the first-ever in the country’s history. This achievement is even more mind-numbing if you consider that the company only started existing 6 years ago. This more than anything is a pointer to what the next decade would turn out to be!
Are banks right to feel threatened?
Summarily, yes. Those who are paying attention have already identified cryptocurrencies as an industry threat. Global banking giant, BNP released a report where they discussed the technology behind cryptocurrency and how it could lead to making banks redundant.
An analyst for the bank wrote about the software behind cryptocurrencies stating that it “should be considered as an invention like the steam or combustion engine that has the potential to transform the world of finance and beyond.”
A UK Banking Report also stated that cryptocurrencies definitely represent a threat to banks and ultimately local currencies, most especially if they ignore new consumer behaviours and preferences when it comes to how they transact and transfer money.
The report states:
“Bitcoin users can handle many of their daily payments needs themselves, without the need for interaction with banks, and avoiding the need to incur bank fees. In the same way, the value stored in PayPal accounts moves outside of the bank’s payment systems, depriving banks of valuable payments revenue.”
What can they do?
Most big banks are now acknowledging that the technology behind cryptocurrencies should be treated as the next big thing, perhaps like the invention of the motorcar to the railroad.
Banks who don’t want to go the way of the early Twentieth Century railroads, those who made the mistake of failing to see the motorcar as a threat, would be wise to pay attention to changing consumer preferences and get on board with digital trends.