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THE EFFECT OF CRYPTO CURRENCIES ON THE VALUE OF THE NIGERIAN NAIRA

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ABSTARCT

This study was carried out on the effect of cryptocurrencies on the value of the Nigeria Naira. To achieve this, 6 significant research objectives were formulated. The survey design was adopted and the simple random sampling techniques were employed in this study. The population size comprise of staff of First Bank Plc. branches in Gwarinkpa, Abuja, FCT of Nigeria. In determining the sample size, the researcher conveniently selected 70 respondents while 55 were received and 50 were validated. Self-constructed and validated questionnaire was used for data collection. The collected and validated questionnaires were analyzed using frequency tables and percentage. The result of the findings reveals that cryptocurrencies can serve as a control variable to currency value of Nigeria. The findings also revealed that the efficiency of monetary policy does have a significant effect on Nigeria Naira. Furthermore, the study showed that cryptocurrency have a significant impact on the value of Nigeria Naira. In regard to the findings, the study recommends that central Bank of Nigeria should always monitor the economic situation of the society before knowing the direction the cryptocurrency will follow. Also balance of payment should always be checked so as known how to apply the cryptocurrency, and financial institutions should always be monitored by government through Central Bank in order to make their operations effective.

CHAPTER ONE

INTRODUCTION

1.1       Background to The Study

Crypto currency constitute as a subset of alternative currencies or better referred to as digital currency  is a digital asset from block chain technology which is designed to function  as a medium of exchange using cryptography to execute  transactions and to control the creation of additional units of the currency. The  evolution and advancement of economic revolution and the need to sustain the economy through advanced financial technology, through a new form of digital currency using  encryption techniques  to regulate the generation of units of a currency and verify the transfer of funds operating independently of a central bank,precipated the introduction of crypto-currency into the Nigerian economy. Consequently a digital currency is beginning to gain wide information and acceptance; and one of the most famous is bit coin. Other digital currencies include Swiss coin and one bit coin, Swiss coin and one coin are crypto currencies or digital currencies created and controlled using cryptography.

Currently countries such as Brazil, Canada, Uk, Germany, south Korea, India have introduced  Automated Teller Machines (ATM) for crypto currency so as facilitate   banking technology. In Nigeria the patronage and acceptance of  digital currencies is gaining wide popularity. The owners do not require the  central bank; nor any physical bank. Once you are  a subscriber, you only know yourselves and they give you a bit of the bitcoin which can be converted  to cash and used for payment in some countries. Currently bitcoin is considered the best among all other crypto-currency, the bitcoin is adjudged the pacesetter. Mining is another type of cryptocurrency. Mining is a way of getting these coins and putting them up for sale all digitally. Also the Billion Coin (TBC) is another type of crypto currency newly introduced with an opening price of 0.001 and has since increased in value. The Trading on crypto currencies such as TBC, Bitcoin, SwissCoin, Edinar Coin and other digital currencies, happens peer to peer. The research therefore seeks to investigate the effect of crypto currencies on the value of the Nigerian naira.

1.2       Statement of the Problem

Crypto currency constitute as a subset of alternative currencies or better referred to as digital currency  is a digital asset from block chain technology which is designed to function  as a medium of exchange using cryptography to execute  transactions and to control the creation of additional units of the currency. The  evolution and advancement of economic revolution and the need to sustain the economy through advanced financial technology, through a new form of digital currency using  encryption techniques  to regulate the generation of units of a currency and verify the transfer of funds operating independently of a central bank,precipated the introduction of crypto-currency into the Nigerian economy. Consequently a digital currency is beginning to gain wide information and acceptance; and one of the most famous is bit coin. Other digital currencies include Swiss coin and one coin.bit coin, Swiss coin and one coin are crypto currencies or digital currencies created and controlled using cryptography.

The entry of crypto currency into the Nigerian financial sector is gaining wide popularity but with fears and doubt about its functionality in since there is no regulatory framework from the apex bank. But there is wide call for CBN to commence appropriate regulatory action. However it is pertinent to note that it is the CBN’s monetary policy restrictions on foreign exchange, that have led Nigerians to innovate the use of bit coin to access foreign exchange. Therefore the eradication of the currency would be viewed as irrational and unworthy of a country which seeks to promote domestic industry and innovation. Consequently it may be found appreciable if the join several other countries of the world to approve its operation in Nigeria. Therefore the problem confronting this research is to determine the effect of crypto currency on the value of the Nigerian naira.

1.3 Objectives of the Study

The general aim of this study is examine the effect of cryptocurrencies on the value of the Nigerian Naira. Specifically, the study wil;

1. Ascertain if cryptocurrencies greases Nigeria economy by offering greater liquidity.

2. Determine if cryptocurrencies serves as a sufficient liquid fiat alternative for Naira holders.

3. Find out if cryptocurrencies can serve as a control variable to currency value of Nigeria.

4. Determine if the growth of Naira depends only in oil sector.

5. Ascertain if the efficiency of monetary policy does have a significant effect on Nigeria Naira.

6. Identify whether cryptocurrency have a significant impact on the value of Nigeria Naira.

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