Technology

Cryptocurrencies to control 50% GDP in the future – Ecobank CIO

by FRANK ELEANYA

October 6, 2017 | 11:48 am
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Cryptocurrencies also known as digital/virtual currencies have the potential to control 50 percent transactions of Nigeria’s gross domestic product (GDP) says Tomisin Fashani, the chief information officer (CIO) of Ecobank and CEO of eProcess International.

 

Fashani disclosed this at the New Age Banking Summit, that held recently in Lagos, Nigeria.

 

The fate of digital currencies was put to the test recently when the Chinese government banned bitcoin exchanges and initial coin offerings (ICOs). The price of bitcoin dropped significantly as a result of the ban given that majority of the market share was held by the country.

 

According to Fashani, the regulatory activities of China will have little impact on the future of cryptocurrencies. However he believes that regulators will eventually get a better “handle” on them.

 

The price of bitcoin, the world’s most valuable cryptocurrency, has since rebounded and is currently on the upward swing. The impact of the rebound is seen to be led by increased demand for the digital currency.

 

A few days ago, economic crisis in Zimbabwe saw the price of bitcoin soaring to as much as $7,200. The country’s sole bitcoin exchange Bitcoinfundi recorded trades at an 85 percent premium. As at press time, the price of bitcoin on Coindesk Price Index was at $4,290.83.

 

Increased activity and soaring prices has also compelled Wall Street investment bank Goldman Sachs to commence plans on a new trading outfit dedicated to cryptocurrencies like bitcoin.

 

The Wall Street Journal reported that Goldman Sachs is in the “early stages” of the effort.

 

Christine Lagarde, IMF Managing Director, has also come out recently to draw regulators attention to disruptive tendencies of virtual currencies, although she noted they “pose little or no challenge to the existing order of fiat currencies and central banks.”

 

“Why? Because they are too volatile, too risky, too energy intensive, and because the underlying technologies are not yet scalable. Many are opaque for regulators, and some have been hacked.

 

“But many of these are technological challenges that could be addressed over time. Not so long ago, some experts argued that personal computers would never be adopted, and that tablets would only be used as expensive coffee trays. So I think it may not be wise to dismiss virtual currencies,” Lagarde.

 

Lagarde also stated that countries with weak institutions and unstable national currencies may eventually look towards adopting cryptocurrencies.

 

“Instead of adopting the currency of another country – such as the US dollar – some of these economies might see a growing use of virtual currencies. Call it dollarization 2.0,” she said.

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by FRANK ELEANYA

October 6, 2017 | 11:48 am
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