Bitcoin or Naira – which should you save?
Bitcoin, the leading crypto asset has generated a lot of debate with the fiat currencies over the years. There has been a fierce comparison between digital assets and fiat currencies. Should I buy bitcoin? Or should I just save my fiat? A growing question begging for a reply.
Bitcoin appears to be a threat to the Nigerian naira like other fiat currencies. Over the past years, Nigeria has been a great hub for bitcoin. The number of bitcoin and crypto transactions and search engine queries coming from the country is currently the highest in the world. This implies that the number of people looking to buy BTC and involve in the digital asset keeps increasing. In terms of bitcoin adoption, Nigeria is the leading country in Africa. Is this a blind adoption or people are really seeing more reasons to do away with the naira and engage more in bitcoin? Let’s discuss.
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Comparing Bitcoin and Naira (FIAT)
Bitcoin has a limited supply. This implies that the number of bitcoin that can be in circulation is fixed. However, with the government in charge of the fiat money, they can decide to print more fiat currency at any given time. So, the naira like other fiat doesn’t have a limit to the amount that can be in circulation. The total number of bitcoin that will ever be in circulation is 21 million. That of fiat currencies is unknown.
Every fiat currency is backed by a central authority. The central bank of each country is in charge of its currency. This implies that the government can issue policies that will affect the value of its currency. However, bitcoin is not regulated by any third party or authority and no government can influence the value of the digital currency.
Reasons why Nigerians choose bitcoin
Bitcoin is an independent asset
Bitcoin is a digital asset that is not dependent on the actions of the fiat currency or the stock market. A rise or fall of the fiat currency doesn’t affect the price of Bitcoin. This is one of the major advantages of the asset. With the constant fluctuations in the Naira, Nigerians prefer to buy bitcoin to avoid being affected by the devaluation of the traditional currency. Although some people may argue that bitcoin is also not stable, it, however, has more value compared to the Naira.
Bitcoin is cheaper and easier for inter border transactions
International transactions sometimes called cross-border payments are trades or deals made between individuals or firms of two or more countries. This type of transaction comes with high transaction charges and a longer delivery time. However, inter border transactions have become very easy with BTC. Using Bitcoin as a medium to transfer funds to someone in another country is very easy and cheaper with a very fast processing time. Basically, instead of using the traditional means that come with high charges and more time to verify transactions, you can make use of BTC. Aside from being a faster, easier and cheaper option, it is also a more secured option for making cross-border deals. You can easily buy bitcoin from Remitano P2P to make international transactions.
Bitcoin is free from confiscation
Unlike the traditional currency that is under the control of any authority (government/central bank), BTC is not under anybody and no authority has power over your bitcoin. While the bank can freeze your bank account at any given time or your assets confiscated by the government due to the power and control it has over it, such can never happen with Bitcoin. Once you buy BTC and store it in your wallet, with your private keys, you alone have absolute power and control over your digital asset without the involvement of any external body. During the recent protest against bad governance and police brutality tagged #ENDSARS, several accounts were frozen by the bank, however, the protesters switched to bitcoin to continue raising funds for the protest. The P2P and decentralized nature of bitcoin made this possible.
Bitcoin is a perfect store of value
Bitcoin being a better store of value to the Naira is one of the top reasons for the adoption of digital currency in Nigeria. A store of value simply means an asset that can retain its value or appreciate over time. BTC doesn’t suffer from significant inflation. Over the years, it has proven to be a better store of value compared to the Nigerian Naira. This can be traced down to the fact that the asset has a limited number that can be mined, setting it apart from the fiat which can be constantly inflated when governments print more money. As a matter of fact, there is an increasing comparison between Bitcoin and gold. While some branded it a digital gold, some believe it’s even a better store of value compared to gold.
A lot of factors could affect the value of Naira like other fiat currencies. The value of fiat is easily affected by the economic strength of the country, inflation, financial policies, and several other factors. However, because the bitcoin isn’t backed by a central body it stays somehow independent from these factors.
The future does not seem bright for the Naira and it is preferable to buy bitcoin and save as a way to preserve wealth. If you save naira and it gets weaker, it will definitely affect the purchasing power of the currency. This implies that what you could afford with a certain amount last year might reduce in the following year. However, due to the limited supply of bitcoin, the purchasing power of the digital currency has a higher probability of increasing over time.