Cryptocurrencies are digital assets designed to work as a medium of exchange that uses cryptography to secure transactions, control the creation of additional units, and to verify the transfer of assets.
A defining feature of a cryptocurrency such as Bitcoin, and arguably its most endearing allure, is its organic nature; it is not issued by any central authority, rendering it theoretically immune to government interference or manipulation. This has drawn a lot of criticism by skeptics and regulatory bodies who believe the lack of governance makes it susceptible to fraud and other illicit activities.
But according to David Ajala, founder of Bitcoin Exchange NairaEx, while there are genuine concerns regarding the lack of financial regulations from central/government bodies, the organic nature of these currencies actually make them safer and much more secure than many other forms of digital currencies.
In this interview, David shares more on the benefits of cryptocurrencies and the growing appeal and adoption of blockchain technology in developing financial solutions and models.
What do you think of cryptocurrencies vis-à-vis other forms of digital currencies?
Cryptocurrencies such as Bitcoin are much more secure than traditional electronic or digital currencies. This is because of their decentralized nature and stronger security methods. These currencies do not have a point of failure.
Why did you decide to set up a bitcoin exchange in Nigeria, a country that is yet to fully adopt mobile money despite its popularity in Africa?
The opportunity for remittance in Nigeria is big because out of Africa Nigeria is the strongest in terms of economy. Nigeria also has the strongest technological infrastructure.
Is there a peculiar need you think bitcoin can fill (or is filling) in the African financial services market?
Yes, Bitcoin is an easy and fast transfer method for sending remittance. Fees for remittance across the world using Bitcoin are only a couple of cents instead of 12-15% fees like traditional remittance services.
Why did you start NairaEx and what do you think the future holds for it?
NairaEx was started to give an opportunity for Nigerian experience to buy and sell Bitcoin and also send remittance for an extremely low cost. It was also started to give an opportunity for the Nigerian community to experience Bitcoin.
Do you see Nigerians adopting bitcoin as a means of payment considering the fact that pay-on-delivery is still the most popular form of payment for goods bought online?
Yes, most definitely as Bitcoin can be used like traditional cash, it also completely removed the idea of fake money as Bitcoin cannot be faked, it cannot be replicated and reproduced.
Adoption of some forms of new technology seems to be low in Nigeria due to ignorance. Can you break down the blockchain technology on which bitcoin was built?
Bitcoin is based on the highest level of computer security which is standard so companies and websites cannot get hacked. Blockchain is shared and stored by each user that uses Bitcoin it means that Bitcoin cannot be duplicated or replicated as everyone has data of how many Bitcoins there are. It also shows an account of all the transactions in the system which are viewable to anyone that uses Bitcoin.
What is bitcoin mining in a lay man’s language?
It is using a computers power and electricity input to solve math problems the reward for solving these problems is Bitcoin. This is done by a simple mining program on computers, through this program mining is done automatically.
Would you advocate the legalization of bitcoin by the appropriate financial regulators in the country? If regulated, does it not lose its uniqueness and ‘revolutionary’ status?
Regulation is bound to happen but Bitcoin is still growing so regulation too quickly can damage the adoption rate and its business interest.
What do you think the future holds for bitcoin in Nigeria and Africa as a whole?
Bitcoin offers a good alternative to cash and I think it can also be used in payment methods for websites and other services that Africa and especially Nigeria is developing.
Do you see the blockchain technology being adopted by financial institutions in Africa anytime in the nearest future?
Blockchain technology will probably be used by many financial institutions in the future as it will save many companies and governments large amounts of funds and will also save them time costs.