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The Nigerian Deposit Insurance Corporation (NDIC) Warns Against Risk of Trading Bitcoin

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Nigerian Deposit Insurance Corporation

Nigerians have yet again been warned by the Nigerian Deposit Insurance Corporation (NDIC) of the risk of doing trade using digital currencies as they have not been authorised by the Central Bank of Nigeria (CBN).

Mohammed Umar, the Director of Research, Policy and International Relations at NDIC, while speaking in at a two-day annual workshop for Finance Correspondents and Business Editors in Kano titled ‘Financial disruption of digital currency and its consequences on the banking and deposit insurance system’, said that their corporation is not tasked with providing insurance covers for any risks related to cryptocurrency trading since they have not been issued by the CBN.

Mr. Umar said,

“The financial regulatory authorities are not playing catch up on the digital currency race in Nigeria. There is no country in the world that allows its citizens to use digital currencies as money not issued by the Central Bank. No Central Bank will accept digital currency as a substitute for its national currency or part of its monetary system when it is not able to control it. Nigerians must understand that adequate notice has been issued by all financial sector regulatory authorities, namely Central Bank of Nigeria, CBN and Nigerian Deposit Insurance Corporation, NDIC, to warn Nigerians who want to trade in bitcoins as gamblers.”

He added: “They can only do so at their own risk. The CBN cannot say anyone cannot trade with it and NDIC will not insure any trading in any currency not issued by the CBN.”

Monitoring of Digital Money Operators

An inter-agency committee that involves the Ministry of Justice, Economic and Financial Crimes Commission (EFCC), NDIC, Department of State Security (DSS), the Nigeria Police and other significant agencies has been formed to “sanitise the system”, said Mr. Umar.

With its secretariat at the CBN, the committee is expected to closely monitor all the activities of digital money operators to protect Nigerians from unnecessary risks involved with cryptocurrencies.

Mr. Umar went on to say,

“If you can buy a bitcoin, nobody will stop you. It is at your own risk. A bitcoin is not covered by the CBN rules, and NDIC will not insure it. We have consistently warned Nigerians that anyone who trades in bitcoin does so at his own risk.”

While stressing and warning Nigerians on the risks that come with bitcoins and other digital currencies and the fact that the NDIC and CBN have no control over them, he explained that even the Bank of England had discovered about 70 risks affiliated with digital currencies.

Cryptocurrencies in Nigeria

The statement came a few days before the 2017 Nigeria Blockchain Alliance Conference that was held in Lagos last week. The focus of the conference was to discuss blockchain technology and how cryptocurrencies can be used to uplift the economy in both Nigeria and Africa as a continent.

What is even more interesting is the fact that the Deputy Governor of Economy Policy, the Director for Banking and Payments, and the Chief Information Security Officer at the CBN were in attendance and spoke positively about the blockchain technology and digital currencies albeit stressing the need to have a proper regulatory framework for cryptocurrencies.

The NDIC’s warning comes at a time when Nigeria has been experiencing growing interest in the bitcoin space. Research conducted by the co-founder for Blockchain Solutions Limited, Lucky Uwakwe, shows that Nigerians trade close to ten billion nairas of cryptocurrencies each month. Nigeria also has more than ten bitcoin exchanges that people can use to buy and trade in bitcoin.

Bitcoin

BitMari Conducts First Test Remittance on the Bitcoin Lightning Network

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BitMari Bitcoin Lightening Network

Zimbabwean startup BitMari has managed to successfully conduct its first Bitcoin Lightning Network test transaction with Tanjalo, a bitcoin startup from Lagos, Nigeria. The transaction signals a shift for remittances in Africa as users can soon expect almost instant low-cost bitcoin remittances.

Fast Transactions, Low Fees

BitMari is a Zimbabwe-based bitcoin company that leverages blockchain technology to expand into new remittance markets for the African diaspora. The startup was founded in 2015 by Sinclair Skinner and Christopher Mapondera to address the challenges faced by Zimbabweans when sending money overseas and vice-versa. In 2017, the company made history by becoming the first bitcoin enterprise to receive a money transfer license from the Reserve Bank of Zimbabwe. The company also formed a strategic partnership with Agribank to handle remittances for their customers using bitcoin.

Tim Akinbo, the co-founder and CTO of Tanjalo, was able to transfer $15 from Nigeria to a recipient in Zimbabwe through the BitMari platform using bitcoin. He believes the almost instantaneous money transfer will be instrumental in transferring value and promote cohesion by bridging local communities. The company is excited about the new development especially after successfully setting up the Lightning nodes.

Skinner, who is an ardent supporter of the adoption of bitcoin and blockchain technology in Africa to solve everyday challenges, stated:

“BitMari’s quick adoption of Lightning is active use of Bitcoin and Blockchain technology to solve real World challenges facing Africans on the continent and in the diaspora; such as costly remittance fees.”

The Bitcoin Lightning Network

The Bitcoin Lightning Network (LN) is a system built on top of bitcoin that enables people to send and receive payments instantly, and lower transaction costs by bypassing the blockchain. The Lightning Network’s use of payment channels lets users transact with each other directly without having to broadcast their business to the entire network. Currently, the Lightning Network is growing after being launched a short while ago on main-net by the Lightning Labs team.

BitHub Africa, a Nairobi-based blockchain accelerator of which BitMari is a member, has published a guide on how someone can go about setting up a Bitcoin Lightning Node on a cheap computing device called Raspberry Pi. The device can be used to process transactions by anyone with the resources and skills to host the node.

For now, BitMari is searching for other Lightning nodes to connect to their own. The company is also focusing on improving its user experience to increase adoption of its services and pass on the benefits of fast and affordable remittances to its customers.

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Coinfest Nigeria Highlights Blockchain Use Cases Beyond Simply Investing in Bitcoin

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Coinfest Nigeria

The “decentralised convention for decentralised currency” CoinFest Nigeria was held on April 5, 2018, in Abuja. Crypto-enthusiasts, blockchain entrepreneurs, and investors came to together to discuss the future of cryptocurrency and the blockchain in Nigeria.

Coinfest is an annual event held in many countries, including Nigeria, which aims to promote the use of digital currencies and blockchain technology through a collaborative initiative.

Despite the recent drop in the cryptocurrency market and increased regulatory scrutiny for cryptocurrencies, Coinfest NG still experienced a strong turnout with over 150 participants coming from within Nigeria as well as other West African nations.

The event’s keynote speaker, Dr. Andrew S. Nevin, said in his presentation that there is a need for more Africans to see blockchain technology beyond bitcoin, highlighting this as one of the reasons why most African ICOs have failed.

“Despite raising billions, 46% of ICOs have failed globally, and the majority of African ICOs have failed. Only SureRemit and a few others were successful. Yet about NGN32 billion worth of bitcoin have been traded in Nigeria.”

Steemit in Nigeria

One of the many topics discussed at the conference was the fast rate at which the Steemit community is growing in Nigeria. Mr. Toju Kaka talked about building a blockchain community through Steemit. He described the blockchain-powered social network as the Telsa of social media, adding that the platform will be a vehicle that will drive cryptocurrency adoption across the world.

Mr. Toju also described how many microbloggers in the country are now leveraging the Steemit platform as means of making money online through posting valuable content. He further went on to say some Steemians are already building hubs in Nigeria.

“As am talking to you right now, there are crypto-enthusiast who have taken it upon themselves to create hubs in some part of the countries like Ibadan, Portharcourt, and Uyo to power Steemians,” Toju said.

AgroPlexi Aims to Provide Financial Inclusion to Nigerian Farmers

One of the interesting startups showcased at Coinfest NG was AgroPlexi, a new platform leveraging blockchain technology to provide financial inclusion in the Agriculture sector.

The founder of Agroplexi, Mr. Ogundele Mayowa, said that one of the major problems of most African farmers is access to funding. Many of them are unbanked and do not have the necessary criteria to qualify for bank loans. This is where AgroPlexi wants to help.

“Here in Nigeria many of us look at the trading aspect, how we can make money from it. But cryptocurrency and blockchain technology is more than just money it’s the future. Agroplexi already has 51,000 farmers in her database and still counting.”

Mayowa concluded by saying that blockchain and cryptocurrency have the potential to solve the problems surrounding poverty and democracy in Africa.

Nigerian blockchain thought leader, Lucky Uwakwe, also spoke at the conference and told participants: “Experts used to say that it takes a good ten years for software to get into the limelight. That is to tell you that if bitcoin can keep on the pace at which it’s growing, in the next two years it will surely dominate the world as PayPal does.”

Coinfest 2018 showcased a wide range of startups, such as Xenderbit, Bitmama, and BeepMagnet, which are a testament to Nigeria and West Africa’s growing blockchain startup scene.

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Nigerian Bitcoin Scam Disappears With Victims’ Funds

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nigerian bitcoin scam

More than 1000 investors stormed the offices of a bitcoin trading company in Calabar, Nigeria last week only to discover that the proprietors had disappeared with their money. The company, which was offering 30 percent interest after a week of trading, stole millions of Naira after about two months of operations.

A customer who had invested ₦5 million said:

“I saw people collecting 30 percent interest after one week that is why I also put in money. A huge part of the money I put in was even borrowed”.

Members of the National Youth Service Corps (NYSC) also reportedly invested their money in the company. One of the members said she invested ₦1.5 million which was her life’s savings while another stated: “That money was all [I had saved during my service year]. This is painful, I thought I could do business and help myself and my poor family.”

The frustrated victims, realising that their investments were irrecoverable, took whatever items they could find in the company’s offices at the Bassey Duke shopping mall hoping to compensate themselves. Furthermore, the angry crowd caused such a ruckus that law enforcement officers were forced to fire warning shots in the air to control the situation.

“The crowd you are seeing today are just a few that have come to get their money. They made millions and disappeared with our money. I don’t know why we would never learn. MMM and the likes that promise quick profit have duped us in the past, yet we keep falling for them, including me. I put in ₦500, 000 into this one and now see my money has gone down the drain,” one of the victims said.

In light of the collapse of bitcoin pyramid scheme MMM in both Nigeria and Kenya, it is surprising that these type of bitcoin scams are still able to attract and finally harm “investors”. It is, therefore, important to highlight that you should never invest cryptocurrency in “investment schemes” that promise high returns in a short period of time as they are guaranteed to be scams.

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