Since cryptocurrency broke out in Nigeria, one of the biggest questions is always”should I invest in this new trend?
Whether it makes sense to invest in cryptocurrency or not is a personal choice. However, we can make the decision easier by debunking some of the myths about cryptocurrency by Nigerians today.
The most occurrence misconception is when people tell you that cryptocurrency is a fast way to lose your funds, and that’s completely not true, they can be volatile. But that is not a solid reason to avoid cryptocurrency. Cryptocurrency volatility can still be mitigated.
Here are 10 myths about cryptocurrency by Nigerians.
Cryptocurrency is a new Ponzi scheme?
To decide if cryptocurrency is another Ponzi scheme. Let begin with the definition of the Ponzi scheme given by the Nigeria Security and Exchange Commission ( SEC).
“A Ponzi scheme is a fraudulent investment in which an individual or organisation pays returns to its investors from me capital by new investors rather than from profit earned through legitimate sources”.
” The scheme promises high returns with little or no risk involved, but in reality, generates returns for older investors by acquiring new investors”.
Based on SEC Nigeria guidelines, the Ponzi scheme must meet the following elements.
So let see if cryptocurrency fall under any of the characteristics
They are not registered by the appropriate regulatory bodies: SEC has pronounced cryptocurrency such as Bitcoin, Etherum as commodities and property.
In most developed countries,crypto gains are taxable, which is classified under capital gain.
They promise high returns on investment: cryptocurrency founders do not promise return on investment, not to talk of high return.
They advised, never to invest more than you can avoid losing. Since the crypto market is highly volatile.
Their promoters are not known to the investing public: Most cryptocurrency promoters which include celebrities, businessmen, for example, Elon Musk is well known to the public.
In addition many global banks, exchanges do not just promote this market, but they have started adopting it in various sectors.
They require the invitation of new investors to pay existing investors: No one is getting paid in the crypto market, comparable to the stock market, the value of asset increases based on the vast adoption rate of the commodity.
The Crypto assests don’t meet the widely accepted definition of the Ponzi scheme.
The vice president of Nigeria- Prof. Yemi osinbanjo, suggests to the CBN not to ban cryptocurrency, rather, regulate the sector. In response, CBN announced the launching of their digital assets and has promised to find a way in embracing the crypto market while maintaining financial stability in the country.
Demand Huge Capital.
Most people think that starting with cryptocurrency will cost a fortune. since they’ve probably heard 1 Bitcoin cost 20 million Naira.
The good news is, you can invest in not-yet-matured coins which cost as low as 500 Naira and watch them grows.
However, If you prefer investing in matured coins such as Bitcoin, Etherum among others, some exchanges permit you to purchase a fraction of a single coin ( e.g 0.001, 0.01,0.02 etc) at a very low price. One can buy a portion of Bitcoin with 1000 naira.
At the time of writing, you can get 1 Dogecoin at the rate of 100. Dogecoin is considered a very promising asset.
Bitcoin is the only profitable crypto asset.
Undeniable, compare to other assets, Bitcoin has gained some momentum. Bitcoin Blockchain was the first to be created, with over $1 trillion market value, it’s safe to say Bitcoin is well backed by big institutions, hence a well-grounded asset.
However, the creation of altcoins has sparked liveness to the crypto world. Most altcoins possess some technological build-up that makes them significantly better than Bitcoin.
With several innovative altcoin projects, the use of cryptocurrency becomes versatile whereas Bitcoin is only regarded as an excellent store of value.
For instance, ICON blockchain has been used for several projects in the Bank, hospital, Government sectors. The Etherum blockchain give rise to smart contracts, NFTs e.t.c
An altcoin with a high future utility can perform better than Bitcoin.
In a long run, even if Bitcoin still maintain its position as the most valuable asset, altcoins can still be more profitable, the reason is altcoin ecosystem is not yet filled up compared to that of Bitcoin.
To mitigate the risk of investing in altcoins, check out
Cryptocurrency is illegal in Nigeria
This is one of the popular myths about cryptocurrency by Nigerians today.
While the central bank of Nigeria is extremely strict in dealing with cryptocurrency because they have not established a framework to regulate the new sector, cryptocurrency has not been pronounced illegal.
Since CBN announced the cryptocurrency ban in the country, majorly of potential investors think of it as being illegal.
This is incorrect, the CBN instruction is to deactivate any bank account having cryptocurrency inflow/outflow but has no right to prosecute anyone legally.
The security and exchange commission of Nigeria, through a public message, announced its motive to provide a framework to regulate cryptocurrency and work in close association with CBN to ensure proper regulations are put in place.
At the of scripting this article, purchasing cryptocurrency via a bank account is not possible but one can use an alternative.
Cryptocurrency is highly risky
This myth has been in circulation not just in Nigeria but globally, while experts have chosen sides regarding this matter, the debate seems
unending, the reason is, it is not a closed question I.e can’t be answered with Yes or No.
Cryptocurrency can be risky when traded because of its volatility. Investors can be exposed to crypto volatility if invested in small-market cap cryptocurrency.
However, one can mitigate the risk by investing in cryptocurrency with a large market capitalisation such as Bitcoin, Ethereum e.t.c.
Another way to minimise the risk associated with cryptocurrency is not to get involved with trading, since it’s known to be unpredictable.
In short, cryptocurrency risk depends on:
What you choose to do with the coin The market capitalization of the coin you invested on Where you store the coin.
Cryptocurrency is governed by white supremacist
A few groups of communities in Nigeria believe the rate at which the price of crypto assets fluctuate is controlled by white supremacists, a means to extract from the poor, so they can get richer.
The innovation of cryptocurrency has given birth to millionaires in Nigeria, enabling the new generation to live their dream.
For example, Gaius Chiebueze, a Nigerian investor who bought Bitcoin in 2011
. Assuming the Bitcoin he bought then was just one, that year the estimated price of 1 BTC was $0.33 (50 Naira) since then, Bitcoin has an increase of over 15000% ( at the time of writing).
Gaius 1Btc is now worth over 25 million Naira!
Cryptocurrency can be a great investment to Nigerians for the long term.
Cryptocurrency operates decentralisation protocol, which means, no one control it.
Cryptocurrency will help to save Nigerians that are left at the mercy of the Dollars/ Naira exchange rate especially when Naira is losing its value.
Cryptocurrency can’t be purchase after CBN ban
The limitation set by the CBN can be bypass.
There are so many ways you can purchase cryptocurrency online in a secure manner.
The CBN directive is to stave off Banks and other financial institutions from partaking in transactions involving cryptocurrency.
A bank account traced to be involved in transactions with any crypto company will be sanctioned.
However, trusted Exchanges that are against the CBN Ban introduced the Peer Peer networking to avoid the CBN ban enabling Nigeria crypto investors to buy and sell crypto.
The Peer to peer networking refers to the direct exchange of crypto between two people without the involvement of Banks.
Here are various places that you can and sell crypto
It’s too late to make a profit with cryptocurrency
Nigeria Sceptics believe that cryptocurrency assets have experienced their full potential, the train has been missed, nothing unique will come off it.
This is the exact story I heard a couple of years ago when I first purchase my first crypto assets.
Ever since then most coins rise to an all-time high
For example, if you invested in a Polkadot crypto-asset worth 50,000 Naira in Oct 2020, you will have a massive gain of about 500,000 Naira in Oct 2021. ,
Avax token will yield 704,000, Solana will yield 3.4 million Naira, AXIE will yield 41 million Naira and the list go on and on.
Just a reminder, only 4% of the world population are adopting cryptocurrency presently, imagine what it will be like if the number doubles in another 5 years.
The train has not yet moved, don’t be deceived.
Cryptocurrency need a highly technical person
Investing in cryptocurrency is as easy as it can get, no codes are involved.
To get started with investing cryptocurrency, sign up with an exchange that offers P2P networking, purchase the crypto assets of your choice, move them to a wallet ( Trustwallet, metamask wallet, e.tc).
You can also purchase your crypto assets from a reliable crypto broker/vendor, they will have your crypto asset send to your wallet after payment is verified.
Technical skills will only be needed if you want to apply for crypto jobs.
The government will successfully scale-out cryptocurrency.
This myth has been formulated nearly a decade ago, yet the crypto market continues to boom.
After the CBN ban, the critics became stronger stating its the beginning of an end to the cryptocurrency.
In response, cryptocurrency stay stronger even better than it was.
What makes cryptocurrency so powerful is that it’s out of control of any authority, not even the Nigerian government because it’s decentralised.
The majority of developed countries are not interested in banning crypto, rather, they are looking for a way to regulate. Since scaling it out is impossible.