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Is Nigeria Likely to Formalise Remittances and Become the Third-Largest Inbound Market Worldwide?

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IMTC AFRICA 2019

Nigeria is the sixth-largest recipient of remittances in the world with an estimated volume of nearly $25 billion a year. This estimate for remittances flow doesn’t account for the informal market, that even if it is shrinking, as most analysts believe, it adds approximately $10 to $15 billion a year to the formal number. That places remittances for Nigeria at around $40 billion. If this were to be true, then it would squarely place the country as having the third-largest volume of remittances in the entire world, ahead of the Philippines and Mexico with highly formal markets.

IMTC AfricaIn a blog post published by remittance expert Hugo Cuevas-Mohr, he discussed the volume of remittances to Nigeria and the importance of achieving more accurate figures and the success in formalising the remittance market in Nigeria. These are also key topics that will be extensively examined at IMTC AFRICA 2019, a conference that will take place in Lagos on September 24-26 at the EKO Hotel. IMTC is the leading gathering for international money transfer, cross-border payment, and Fintech companies around the world and has chosen Nigeria as the site of its biannual African event to help in the innovation, formalisation, and transparency of remittances in the country.

Why Formalisation is Necessary

Parallel markets, or informal markets, are notorious for skewing a country’s volume, revenue, and wealth statistics; in an age where data is glorified, it is clear to see why this is such a problem. Countries are valued and respected based on their stats, and if Nigeria’s stats are not reflecting the true volume of remittances, then their significance is being missed.

The Nigerian Naira is traded at different rates on the parallel market than on the official market. For instance, as of August 6, the Central Bank of Nigeria valued 1 USD at 306 NGN (Niara), whereas the parallel markets revealed that 1 USD was actually trading at 360 NGN. Such a large discrepancy in the exchange rate reveals just a portion of the issues taking place. If the parallel market exchange rates are correct, then it is extremely unlikely that Nigeria will be successful in curbing the informal market. 

Nigeria’s parallel markets have been prevalent for some time now, but the issue became serious in 2016 when the Central Bank of Nigeria, to curb the informal market, limited the number of legal money transfers to only three International MTOs: Western Union, MoneyGram, and Ria. This subsequently forced all other MTOs to call upon CBN to allow more MTOs to be licensed, jumping to more than 60 in three years. Has the strategy from CBN been successful?

Mr. Cuevas-Mohr states in his blog: “The remittance market in terms of companies abroad serving the Nigerian Diaspora is growing now at a fast pace as remittance volumes to the country increase, partly due to organic growth and partly due to more funds being channeled through official channels.”

Leon Isaacs, IMTC AFRICA 2019 Co-Chair, and an expert in remittances will discuss extensively at the conference the findings that his surveys and data gathering work is revealing. Other topics to be discussed at this trendsetting event will be the impact of Payment Service Banks and Fintechs on remittances, the role of blockchain and cryptocurrencies, the importance of strong compliance and risk management and the importance of MTO partnerships with local banks and Fintechs to help to formalise remittances.

Nigeria And the Mobile Industry

man with mobileAnother pressing topic at the conference is that of the mobile industry. In a recent development, the Nigerian government is allowing mobile companies to directly offer financial services. Previously, mobile companies were required to form rigid agreements with banks to offer financial services in the country. These new companies will be known as Payment Service Banks (PSBs), similar to how India enables mobile companies to offer such services.

This is massive news for the world of remittances as PSBs can give their unbanked customers, and generally to all low-income residents, the opportunity to manage mobile money as the digital ecosystem grows. It can also impact the government’s financial inclusion initiatives. The impact of the PSBs in the remittance market is hard to predict but everybody will be watching. Mr. Cuevas-Mohr said: “It will take time to see the impact to the market of Telcos being allowed finally to offer themselves financial services, and remittances.”

As many MTOs participating at the IMTC AFRICA 2019 conference in Lagos have expressed, the event comes at the best time for the industry in Africa. Filled with a compliance course, an innovation forum, panel discussions, keynote speakers, roundtables, and ample time to network with industry leaders, the event will be a gathering of the Who-is-Who in the field of African remittances.

The article was contributed by David Cullinan. 

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Where to Purchase Bitcoin in Africa: P2P Marketplaces vs Centralised Exchanges

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Where to Purchase Bitcoin in Africa

When you decide to buy bitcoin, you will probably ask yourself: “Where do I purchase bitcoin in Africa?” The simple answer is an exchange. But, as you will learn from this guide, you cannot just buy bitcoin from any exchange.

Where to Purchase Bitcoin in Africa

You will have to consider several factors before choosing an exchange. For instance, you need to use an exchange that is available in your country and one that supports local payment methods. However, you also need to think about the type of platform to use.

Crypto exchanges come majorly in three forms: centralised, decentralised, and peer-to-peer (P2P). In this guide, we will discuss centralised and peer-to-peer exchanges.

Centralised exchanges act as intermediaries, just like banks. When you buy bitcoin from a centralised exchange, you are trusting that it will safely complete the transaction for you. Moreover, the exchange will store your digital assets on your behalf. As a result, trust is significant for centralised exchanges to succeed.

On the other hand, peer-to-peer exchanges give control to the people. Rather than buying bitcoin from the exchange, you will buy BTC from individuals that have listed their offers on the platform. Additionally, P2P exchanges do not have a third party. Instead, they use software to enable peers to trade with each other.

Purchasing Bitcoin on Centralised Exchanges

buy bitcoin on centralised exchanges

Both P2P and centralised exchanges have their demerits. However, events that have taken place in the past indicate that your assets are not as safe on a centralised exchange as you would hope.

For example, exchanges like Bitfinex and Mt.Gox got hacked, and people lost their money. That is why you will often hear experts say that you should never leave your funds on an exchange. The Bitfinex hackers moved 416 bitcoin on June 11, 2020, to an unknown address and probably sold it to unsuspecting buyers.

Moreover, some centralised exchanges could have limitations to the amount of money that you can withdraw, while others could make it completely impossible to withdraw funds.

As is the case with banks, centralised exchanges can collapse overnight, leaving behind frustrated and shocked customers. The disruption of trade, loss of funds, and lack of access to portfolios can make it difficult for users to move to another exchange and continue trading.

Another problem with centralised exchanges is that you have to deposit fiat money to buy bitcoin. Since you will have to enter your debit or credit card details, you will be giving up your privacy in the process.

Why Choose P2P Marketplaces?

P2P marketplaces are a popular choice for Africans. Also, P2P exchanges are more available on the continent than centralised exchanges. Therefore, you are more likely to find them easily accessible. For instance, P2P marketplaces – like Paxful and Localbitcoins – are available in many African countries.

Some P2P marketplaces have released more accessible versions of their platforms through mobile apps. For example, Paxful has an Android and iOS app that enables users to buy and sell cryptocurrencies straight from their mobile phones.

Unlike centralised exchanges, P2P marketplaces give you control over your funds, and you can transfer your digital assets to an external wallet at any time. Some P2P exchanges also offer non-custodial wallets that give users access to their private keys, giving them more control over their fund’s security.

P2P marketplaces make it easy for users to carry out fiat to crypto transactions and vice versa. That means that you can sell bitcoin and receive payment in your local currency. Paxful, for instance, offers flexibility to both buyers and sellers. Buyers can purchase bitcoin in their local currency, and sellers can sell bitcoin and cash-out in their local currency.

Payment Methods

PaxfulP2P marketplaces like Paxful support a wide range of payment methods, making trading convenient for users. For example, Paxful has over 300 payment methods, including mobile money, bank transfer, PayPal, and Western Union.

You will find that most centralised exchanges are rigid with the payment methods they support. Most times, they will only accept bank transfers. So, it is a breath of fresh air that some P2P marketplaces accept a variety of payment methods.

Another convenience that P2P exchanges offer is privacy. To buy bitcoin on Paxful, you do not have to deposit money to your account. Instead, you will send money directly to the seller’s preferred account of collecting payment.

Source of Income

  • P2P exchanges enable users to make an income through trading and affiliate programs. Since users have the option to make sale offers above the market price, they could create a steady flow of income. You can start a crypto trading business by registering as a vendor on Paxful.
  • You can also earn an income by joining the affiliate programs on P2P marketplaces. For example, you can earn a percentage of the escrow fees on Paxful once your affiliates purchase bitcoin on the platform.
  • Lastly, if a P2P exchange shuts down, traders can move to another marketplace and continue trading. Therefore, the level of disruption to users here is lower.

From the above comparisons, it is clear that P2P marketplaces are the better platforms to purchase bitcoin in Africa. Nonetheless, caution is crucial despite the type of exchange you choose. Always remember to move your funds to an external wallet, preferably, a cold one. Also, implement the security measures that the platform you are using recommends.

Read this guide to learn how to buy your first bitcoin on Paxful.

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Weekly News Roundup: Twitter Suffers From Hack And Widespread Bitcoin Scam

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Twitter Hack

In Bitcoin Africa’s Weekly News Roundup, we look at the most trending blockchain and cryptocurrency stories from Africa this week.

Here are our top picks!

Hack Hits Twitter, Hackers Walk Away With $120,000 in Bitcoin

On Thursday, Twitter witnessed the biggest hack in the app’s history. A group of hackers is suspected to have been behind the social engineering attack on the platform.

Bitcoin HackAt the center of the hack was a bitcoin multiplier scam asking people to send money to different addresses to receive two times of what they sent. The scam tweet initially showed up on account of cryptocurrency exchanges like Binance, Gemini, Coinbase, Cash App, Kucoin, and Bitfinex.

It quickly extended to the accounts of crypto personalities like CZ Binance, Charlie Lee, and Justin Sun. Twitter Support promptly sent out a tweet that mentioned that it was investigating the breach, only to end up compromised. The final part of the hack targeted major American accounts like Obama, Joe Biden, Kanye West, and Kim Kardashian.

Twitter eventually had to ban all tweets containing a bitcoin address and freeze verified accounts to manage the situation.

The elaborate scam managed to collect $120,000, which has been on the move. Most exchanges have blocked transactions from or too the scam addresses.

At the time of writing, affected accounts have been restored, and Twitter is still investigating the hack.

Terrabit Nears August HardFork

Terrabit has made new announcements concerning the hard fork scheduled to take place on August 1st. The major update will bring masternodes, DAO style governance, desktop mining, and a coin swap.

The coin swap will happen across the span of a fixed date. Each user will receive 1 CREDIT coin on the new blockchain for every 1000 coins from the old blockchain. Users who are unable to swap their coins during the stipulated time frame may lose their coins. What’s more, masternodes will be introduced with a collateral of 50k CREDIT coins.

The huge reduction in circulating supply and locking of coins for masternodes is expected to increase demand according to the team’s updates.

On the crypto markets, bitcoin continues to trade between $9,300 to $,9,000 while altcoins like ChainLink and Tezos registered significant gains.

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Bitcoin SV Payment Use Case: A Look at Money Button

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bitcoin sv payment use case

Money Button is a Bitcoin SV payment use case designed to emulate the Facebook like button. The product is enabling users to send money over the internet with a single swipe.

Bitcoin SV Payment Use Case, Money Button

Money Button Logo

Money Button is an API for the Bitcoin SV (BSV) blockchain that businesses can add to their apps and websites. It is also a non-custodial BSV wallet. BSV is a cryptocurrency created from a Bitcoin Cash fork in November 2018.

According to Money Button CEO Ryan X. Charles, the payment system aims to solve two challenges: high transaction fees and less-than-satisfactory user experiences. These are problems that people face when sending money over the internet.

“Money Button is a simple payment system,” he states in a case study. “The idea is to make it so that sending money over the internet is the easiest possible thing that you can do, both as an end-user, as well as for the business that uses Money Button.”

Money Button payments cost less than one cent and are near-instant. The API allows businesses to onboard a blockchain-based payment system. Additionally, consumers can send payments easily through swiping.

Besides facilitating BSV payments, Money Button features built-in currency conversion, smart contracts, and authentication. It also supports multiple outputs and the writing of files or invoices to the blockchain.

Another feature is the invisible Money Button, where apps swipe the button for you, but with your permission. The purpose of this feature is to increase convenience for users.

How It Works

To get started, users have to create an account, open a BSV wallet, and acquire a paymail address. A Paymail is an email address that allows users to send and receive money.

Money Button

With an account on Money Button, you can fund your wallet from an external wallet and conduct peer-to-peer transactions with other users.

Bitcoin SV

Also, you can make payments to Money Button-enabled businesses. If you have a business, you can click “Make a Money Button” to add the API to your website. You will get HTML code to copy and paste. Additionally, you can use the more sophisticated Javascript and React codes. The Javascript version has all the features and will allow you to update Money Button dynamically. The React version has all the features as well.

Once the Money Button API is up and running on your website, customers can pay for products or services by swiping the button. Payments are deducted directly from the user’s Money Button wallet. When customers swipe, they are signing the BSV transaction with their keys.

The Money Button wallet serves as a sign-in credential on apps and websites using this API. “What we are doing is creating a method that can eliminate every possible barrier to onboarding users to this technology. That means reducing the number of steps required to sign up to Money Button, acquire BSV and then use it in an application, as close to zero as possible – that has always been a key focus for our business,” Charles explains.

Paymail

Paymail is an identity protocol that eliminates alphanumerical wallet addresses. The product is a collaborative effort of Handcash, Money Button, Centbee, Electrum SV, and nChain. Paymail uses readable names that look like email addresses to improve user experience. As a result, users do not have to use long unreadable addresses to send BSV.

When using Paymail, users do not see the Bitcoin SV address. They will only see the Paymail address. However, the software will use the BSV address to send the transaction. This address is invisible to the user unless they choose to view the transaction’s technical details.

Money Button users can create a Paymail by going to their profile and clicking “create New Paymail.”

Bitcoin SV Payment

Why Bitcoin SV?

Bitcoin SVMoney Button emerged from a different project called Yours. Yours was a social network that enabled users to tip, vote, buy content, and comment via a “money button.” Yours was launched in 2017, and a year later, the network switched from BCH to BSV.

Yours was created with the idea of a “money button.” Therefore, the owners borrowed this idea and created Money Button.

Money Button uses BSV for the following reasons:

  • The Bitcoin SV blockchain has large block sizes. As a result, blocks can process more transactions which results in faster and cheaper transactions
  • BSV targets businesses, which means that the developers are working to make it more suitable for these users
  • BSV is appropriate for payments

Future Plans

To date, Money Button has facilitated more than $10 million in payments. Going forward, Money Button plans to add more features to make the product “more useful to businesses,” while remaining the same for end-users.

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