CBN, NDIC May Consider Digital Currency, ‘Bitcoin’

By Modupe Gbadeyanka

For a while now, promoters of a digital currency, Bitcoin, have been urging Nigerians to key into the system just like the controversial MMM Ponzi scheme.

This has got the attention of the Federal Government, which has promised to look into the programme so as to advice citizens.

It also said the system may be adopted in the country if investigations give it a go-ahead.

At the 2016 Workshop for Financial Correspondents on Friday in Kaduna, Managing Director of Nigeria Deposit Insurance Commission (NDIC), Mr Umaru Ibrahim, disclosed that his commission and the Central Bank of Nigeria (CBN) have set up a committee to look into the trending ‘bitcoin’ scheme.

“On our part, we have constituted a committee together with the central bank to have an in debt study of this phenomenal bitcoin.

“We will look at its advantages and disadvantages, what it means for the payment system and what it means for safety and security of customers.

“We will also look at what it means for money laundering, anti-corruption, crime and measurement of money /near money instrument for the economy.

“But we need a lot of education to do this and I’m calling on you (media) to educate yourselves about all of this so you can educate the public,” Mr Ibrahim said at the event themed ‘Economic Recession and the Nigerians Banking Sector: Opportunities, Challenges and the way Forward.’

He explained that ‘bitcoin’ included what is being called block chain technology based products in the market, noting that a lot of Nigerians had already started patronising bitcoin.

Mr Ibrahim also said some leading central banks in Europe and the United States had adopted their own versions of bitcoins.

“Some of the central banks have also adopted it and are seriously doing everything possible to bring in the emergence of this invisible products.

“The owners do not need any central bank; they do not need any physical bank.

“If you are a subscriber, you only know yourselves and they give you a bit of the bitcoin and in some countries you can convert it to cash.

“You can make payments with it because it has been recognised and one of the famous ex-chief executive of Barclays PLC, Antony Jenkins, have joined the group’s board of directors,” he said.

According to Wikipedia, Bitcoin is a cryptocurrency and a payment system invented by an unidentified programmer, or group of programmers, under the name of Satoshi Nakamoto.

The system is peer-to-peer and transactions take place between users directly, without an intermediary. These transactions are verified by network nodes and recorded in a public distributed ledger called the blockchain, which uses bitcoin as its unit of account.

Since the system works without a central repository or single administrator, the US Treasury categorizes bitcoin as a decentralized virtual currency.

Bitcoin is often called the first cryptocurrency, although prior systems existed and it is more correctly described as the first decentralized digital currency. Bitcoin is the largest of its kind in terms of total market value.

Bitcoins are created as a reward in a competition in which users offer their computing power to verify and record bitcoin transactions into the blockchain.

This activity is referred to as mining and successful miners are rewarded with transaction fees and newly created bitcoins.

Besides being obtained by mining, bitcoins can be exchanged for other currencies, products, and services. When sending bitcoins, users can pay an optional transaction fee to the miners. This may expedite the transaction being confirmed.