The ‘Guns don’t kill people…. ‘ phrase began with the ‘pro gun lobby’ in the US. This is an argument that has been raging for years, and I’m not here to debate the merits of either for or against.
The phrase has been modified over time ad nausea, mostly by novelty and souvenir companies making t-shirts, mugs and so on, looking for a catchy phrase that can sell wares.
A check online reveals a wide variety of endings, anything from ‘Dads with Pretty Daughters’ to ‘The Clintons’.
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Above is one taken from the ‘Karate Kid’ Blog which ends with ‘Ninjas’.
The ideology however, underlies a very basic fact, which is that inanimate, i.e. non living entities, do not spontaneously create problems on their own. Bad things can only come from the actions of bad people.
Crypto-currency in Nigeria is not inherently evil. It is a fluid way of transferring value. It is a money ‘species’.
The faster money, or to be more precise, ‘value’ can move to complete a transaction, and the lower the cost overhead on that transaction, then the quicker new and interesting things can happen.
It is important to realize that transactional tools are neither good nor bad, they just ‘are’. Removing things or restricting things doesn’t discriminate on the basis of intent. However as nations, when we act to curb things of universal benefit in the hope of averting the perpetration of bad acts, those who often suffer the most are the innocent, the poor, the vulnerable, and/or those who contribute the most to the benefit of society.
Nigeria could have been the apex global performer in a dynamic business sector only yet a few years old. It was once the second largest trader in the world, and despite a CBN ban, it still ranks 4th, as of Oct 21, 2021 (source c-sharpcorner.com)
Crypto is just a transaction vehicle, and the problems arise when we think of them as an investment. In a lot of ways they are limited in their application, but so too are many currencies, including the Naira, which cannot be traded on open international money markets.
While the value of different cryptos and different FIATs can relatively go down as well as up, I just see them all as different forms of liquidity. I don’t see them as equity or commodities.
If a Nigerian decides to move to US, for a while, the way of thinking, they are converting dollars to Naira in their heads when they see prices. If they get to settle in US, they stop doing this, and think in dollars only. Dollar going up or down against Naira only matters if they are doing foreign remittances.
The problem with viewing crypto as an investment winner against FIAT, ie sovereign currencies is that it’s easy to win races against thoroughly useless competition.
The real goliath in the value race is not something that has value at all, but a completely different type of economic warrior, and that is the RPI , the Retail Price Index. The grim reaper that represents inflation.
RPI never really loses against transactional value instruments. Individual components of it may, in particular years but overall no.
So for prosperity, what we need is a very strong transactional value instrument to start with, but we also need the growth of specialist investment services around it, which are going to leverage it to stimulate business and commerce and give investors a return on their principal while preserving it, in a conspiracy to collectively thrash the RPI in the race.
Just as many investors in Nigeria who bring dollars want a deal where they get a return in dollars and preserve their dollar principal, the next stage, in the crypto ecosystem trajectory should be to build out on the financial services side, treating it just like any CURRENCY.
So if the RPI in Nigeria in a bad year is 33%, if you invest 100 Eth, let’s say you expect a modest 5% profit, then at the end of the year, you expect 138 Eth back. This is good business.
The sad thing is, Nigeria could have had that trajectory. Based on its transaction profile a few years back, and the extent to which it is leading in new Fintechs, the evolution in the crypto space would have been inevitable.
A CBDC is a distraction and cannot bring this dynamic. If anything, it will probably accelerate RPI though simplifying quantitative easing processes.
Let’s hope some new evaluation by FGN will bring a change of direction soon.
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