Financial Information Platform

Cryptocurrencies as the means of payment of the future?

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The payment culture in Nigeria will change significantly over the next few decades. Even if Nigerians are a rather conservative people and will certainly not voluntarily give up their cash anytime soon, the abolition of cash cannot be stopped in principle. There are too many interest groups for whom cash is a thorn in their side.

Practically, cash is also not the most environmentally friendly solution because it has to be produced, using chemicals, special paper in large quantities, paints and much more. It has to be transported, stored, counted and managed.

Especially with coins, transport costs are something that you have to take into account. An electronic currency would certainly be easier and if it is set up correctly, it would also be more environmentally friendly. 

In addition, there are also many other factors, such as better tracking of cash flows, for example, to be able to more easily uncover undeclared work, tax evasion or bribery. In the same way, digital currencies would also have a lot of advantages for users. In this way, retailers could save themselves handling small change, which in many places saves time and comfort. 

For example, just think of smaller market stalls or restaurants that never have to worry about change again. Waiters no longer had to carry heavy wallets and customers could pay more hygienically and faster. Billing is then digital, with a digital receipt and much more efficiently.

 

Cryptocurrencies have been in the hands of many people for years and are excellently suited as a basic technique for digital currencies at this point. But while classic cryptocurrency trading is as easy as downloading a song from iTunes, it’s hard to pay with it.

Of course, cryptocurrencies can now be bought and traded in many ways. Even from the sofa or from the café, trading in cryptocurrencies is no longer a problem.

Providers offer simple apps that allow you to trade directly from your mobile phone or tablet. This can be done quickly and reliably in fractions of a second, provided you have a reasonable internet connection, from anywhere.

But cryptocurrencies have one major disadvantage, they fluctuate greatly in price. Cryptocurrencies are also not exactly environmentally friendly and consume, at least for the moment, many times the cost of cash.

Cryptocurrencies are evolving, such as the second-largest cryptocurrency, Etherum, which has a new system is now said to offer up to 99.95% energy savings, but volatility is always a big problem. As long as the prices continue to fluctuate so much, it is hardly possible to use cryptocurrency as a regular means of payment. The problem here is that you can never really say whether the N500,000 thousand naira you just paid in Bitcoin for the new television is suddenly only worth N420,000 thousand when you get billed. Depending on the cryptocurrency, such price fluctuations are not unusual.

Nevertheless, it is to be expected that digital currencies will be the means of payment of the future. After all, there are already pioneers here, such as El Salvador, where Bitcoin is the official means of payment, or China. The latter in particular is more likely to be a realistic example of a digital payment culture.

Digital payment services have been preferred in China for years. Contrary to the payment culture in Europe, the digital payment culture in China is very well received. Alipay and Wepay, the two most popular digital payment methods in China, are accepted and used by the entire population. Even older people have no problem using them.

Here in Nigeria, that’s something we certainly need to learn. Especially the acceptance of a new technology is still difficult for many people in this country and it becomes more and more difficult with increasing age. This is where the typical Nigerians differs greatly from the western world. We can certainly still learn a lot especially when it comes to technical solutions.

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