On February 5, last year, the Central Bank of Nigeria (CBN) ordered financial institutions to stop facilitating crypto transactions and desist from transacting with entities engaging in crypto. Despite the CBN’s order, which has been voided by a court ruling, no official pronouncement has been made, but trade in crypto continues to flourish. LUCAS AJANAKU reports that the deployment of 5G technology in Nigeria will further deepen the global trade in the country.
Ostensibly as official reaction to the booming trade in crypto, the Central Bank of Nigeria (CBN) first clamped down on traders and financial institutions that were facilitating the trade. It later launched its version it called e-Naira.
Crypto and eNaira are digital or virtual currencies and are mediums of exchange but are not regular money. While the former is not issued or backed by the Federal Government or any other government or central bank, the latter is.
But in the years ahead, the crypto world will continue to see infrastructure development, proliferation of protocols, expansion of the metaverse, evolution of non-fungible tokens (NFTs), as well as increased regulation, according to Michael Sonnenshein, CEO of major digital asset investment firm Grayscale.
In a letter to investors, the CEO took a moment to look back, stating that “it is remarkable where we are today compared to 12 months ago”.
Crypto and Web3 are seeing increased attention and acceptance by the media, regulators, legacy financial institutions, and world leaders. Therefore, crypto is continually increasing its footprint and becoming “further woven into the global economy,” Sonnenshein said.
As for his look into the future of crypto, the CEO said he is focused on “the big picture,” listing five key trends to watch this year and beyond.
The first is crypto infrastructure development. The digital economy requires the tools and services that facilitate access to and usage of crypto, which is why crypto infrastructure will continue to grow. This includes exchanges, wallets, and analytics software.
“As the crypto economy and existing financial markets become increasingly intertwined, these are likely to provide some of the most compelling long-term investment opportunities,” he said.
During the year, more protocols than ever before will be witnessed.
The increase in the number of different crypto protocols is “staggering, “and it is not slowing down, finds the CEO.
“Sorting through these protocols to separate the wheat from the chaff continues to be challenging, requiring deep knowledge of both the technology and the marketplace,” he added.
Expansion of Web3 and the metaverse will also play a significant impact in crypto adoption and trading.
The Web2 experience is defined by large centralised corporations, with the users being the product and the means of revenue generation, Sonnenshein said. On the other hand, Web3, which, according to the CEO, includes the metaverse, shows opportunities for a digital future where the users control their data and digital footprint in all “the focal points of societal engagement,” such as commerce, gaming, entertainment, news, and social networks. “Web3 flips the script and empowers users in a revolutionary way,” he added.
According to the CEO, the NFT’s current iteration is limited, mostly to digital art – however, this will change as they continue to evolve through the years into “more sophisticated” use cases. This will especially be seen in areas such as authenticity, provenance, and ownership, as well as across sectors, including fashion, music, gaming, real estate, and ticketing.
“The public discourse and momentum around NFTs demonstrates the material value of digital verification.”
New regulation and policies are expected in this sphere of digital human endeavor. Grayscale finds that increased regulation is both inevitable and beneficial. Sonnenshein argues that we’ve never before seen regulators and policymakers engaged and articulate about the crypto ecosystem as they are now.
“This enables the conversation to shift to how these new technologies – when provided with the appropriate regulatory frameworks – can flourish, keeping crypto companies in the United States, and setting a global standard for crypto regulation.”
Going back to the CEO’s comment on how far the industry came in just a year, he noted that it’s easy to forget that ‘we are still in the early days – and this is the most exciting part about crypto’.
Losing the sight of this early age, Sonnenshein said “leads many to make predictions that are premature or unfounded.” For instance, he said digital assets and/or the metaverse will not replace the physical world or traditional asset classes – but will augment them, stating.
“While the path of the digital economy is relatively unknown, our reality is increasingly a fusion of the analog and digital worlds,” he said