In this interview with SAMSON AKINTARO,
Mr.Paul Ezeafulukwe is the President, Stakeholders in Blockchain Association of Nigeria (SIBAN).In this interview with SAMSON AKINTARO , he speaks on the business of cryptocurrency in Nigeria and the benefits of the underlying blockchain technology for economic development.Excerpts:
Before now, the CBN and NDIC had warned Nigerians against dealing in cryptocurrency, what is the current level of Nigerians’ participation in the digital currency market?
I can tell you it’s quite huge, though we have more of the millennials.
We have a good number of bankers who are into cryptocurrency, but majorly it’s among unemployed youths who have seen an opportunity and they are taking hold of this opportunity to engage themselves into productivity, so it’s quite high.And it also gives it also gives us a lot of concern because we’ve noticed that people from other countries are exploiting the fact that some of our people don’t understand the dynamics of good projects in the blockchain space.
So, they are ready to invest where there is no future or invest in projects that do not have sustainability and most times they lose their money.And there is a critical factor that is affecting both knowledge of blockchain and also affecting the mindset of people towards bitcoin.The difference is the fact that the first people learned about bitcoin and cryptocurrency in Nigeria was through MMM.
So, because of that, many people think it is something bad.No, it’s not bad.Cryptocurrency is not an illegal currency or whatever they call it.It is a means of transaction; it is a currency like other currencies; just that it is digital, it is not something you hold.
So, because of the mindset of MMM, people lock their mind to ever having anything to do with.I also had that problem some years ago when they first told me.If I had put my money then when I got to know about bitcoin, the money would have been huge by now.At that time, bitcoin was about $500 per one, but before I knew it, I saw it came to almost $20,000 per one before it retraced.
Some people call it crashed but it actually retraced, just as gold, dollar etc, had done at some point.
Dealing with a new technology that has not yet gained wider acceptability and coupled with government’s warnings against it, what are the challenges you currently face?
Definitely, as a young technology that is still at its nascent stage, there are a lot of challenges and the critical one among them is the harassment of our members by police.Some of our members are being arrested for trading Bitcoin, which is not illegal but because the security agencies do not understand it, they see anybody that has cryptocurrency app on his phone as a fraudster.
We want the law enforcement agents to be critically objective towards the industry.Right now, even the IMF recognises bitcoin, some nations are taxing bitcoin transactions.And whether we like it or not, some expatriates now wire their money through cryptocurrencies.
It is not illegal, it is digital currency.So based on that, the earlier our law enforcement agencies understand this technicality, the better for them and for us.
Let me cite an example, there was an issue recently, where the daughter of a PDP honourable was abducted in Adamawa State.Now, when I heard the story, I realised that the police didn’t know what to do.Because up to this moment, I don’t think they have updated their IT department on the technicalities of how to track digital currencies.
But immediately, I approached them that look, we have a self regulatory association that can help them because we also want the situation, whereby there’s a symbiotic relationship between our organisation, government and other regulatory agencies, to be able to at every point in time, help them solve the problems because some of us are ahead in this technology.
We have Nigerian coders who contributed to the bitcoin network.So, Nigeria is a great country.And the earlier we realised that we can we can compete in the global ecosystem, the better for us.And we encourage everybody to do same.
We encourage our people; the coders, the businessmen, to move up to that because whether you like it or not, the dollar controls our economy.The moment the dollar drops, it affects our currency whether positive or negative.
See the situation with coronavirus now and naira is dropping.
We have to move up on that index of global competitiveness; it is very important.And we need to look at what is the world saying? What’s happening in the world? What’s happening with digital currency? What’s happening with cryptocurrency? What can we do as a nation? How can we support the youth? If you look at the country today, unemployment is quite high.
And as unemployment is high, the youth are beginning to look at what they can do.They are asking themselves: What can we do as a people in order not to be lazy, in order not to be a liability to our parents and to the country? And one of the good things the youths can do at this stage is to maximise every opportunity in the internet industry sector, digital currency sector, social media sector, and other new technologies that are helping like Artificial Intelligence (AI) and the likes.
So the earlier the authorities stop harassing our people who are into these things, the better.One way they can do that is that they need to come to the level to understand what Bitcoin is.They also need to come to the level to understand what all these technologies are.
The earlier they understand this, the better, because at the end of the day, we’ll be reducing unemployment with those technologies.
People will be able engage themselves and do something productive for themselves and for the country.We also contribute to the tax base of the nation and which is very important.Social media and all other mediums that we use have the capacity to bring in billions of dollars a year if grown to that level.So, we want the authorities to understand what those technologies are all about.
They need to think; how can we help these people? How can we stop victimising them and throwing them away?
Yes, no doubt, there are some people who use cryptocurrencies to receive illicit funds.But also, there are people who use naira and dollar to receive illicit funds.
Do you now say because they use naira you will arrest everybody holding the Naira? No.So, it does not mean that everybody who owns bitcoin is a criminal.No.
So, we are speaking to government and all agencies, both at the state and local levels on the need for them to understand us and what we do and how it can benefit them, benefit us and benefit our communities.
As SIBAN, how many members do you have now?
We are quite big.We are a group that has pockets of different members.I came to SIBAN with my community and in my own community, we have over 300 members.There are people who have communities of 500 members and some have communities of 1000.
So, it is those different communities that make up SIBAN.We are also moving to expand the campus communities.
It is a growing community that has members in thousands.Our goal for this year is to hit 200,000 members by the end of this year.
So, it also depends on how the entire market goes, because it will also sweep people to come into the ecosystem.
We are looking at how we can bring practical real use cases of cryptocurrency.People hear about blockchain, they hear about cryptocurrency, but it’s beyond just a currency.There are so many things that can come out of it.Like the recent US visa ban against Nigerians, now check the white paper that came out from the US State Department, one of the things they are saying is that Nigeria does not have what is called identity management system.
What that means is that somebody can leave Nigeria, go to US bearing John Thomas and he’s not John Thomas.The country does not have identity database of its citizens and it’s a threat to them because somebody who is probably a wanted person, a criminal, a terrorist can infiltrate that system, get a passport from Nigeria, bear any name, he can be Sanni, he can be John, he can be Muyiwa and then go to America and does damage.Meanwhile, the person is John Thomas.By the time they come to Nigeria there is no record of that person.
So, blockchain can solve that problem.We can put our identity database on the blockchain and if the particular network that is used is a very good network, it is immutable.Somebody cannot erase it, it is a permanent thing.
So, there are different ways around it, not just the identity management, even our electoral system, we can put it on the blockchain.We can also put the way we track our crude oil.You know Nigeria is one of the wonderful countries in the world where the, the figure of oil produced, from the statehouse from NNPC, from the ministry, from seabed is always different.
If you ask the CBN Governor how many barrels of crude oil are we producing? The figure he will give you will be different from what each of those people who are supposed to know will give you.This is a problem that the blockchain technology can solve.The blockchain has a lot of potentials and I keep saying it that the blockchain is not for the West, it is for Africa.The West have a lot of working institutions.But here, we have a lot of things that are not working.
So, the earlier we utilise the blockchain to leapfrog all our institutions, all our economy, the better for us.
You mentioned earlier that there is a misconception of cryptocurrencies, especially, based on the fact that many Nigerians got to know about Bitcoin through a ponzi scheme, what are you doing to disabuse the minds of Nigerians about this misconception?
Yeah, we do a lot of education.We do online education.We go to schools; both secondary and tertiary institutions.Recently we were at Crescent University and we were in University of Ibadan and Obafemi Awolowo University.We also went to University of Enugu recently.
We have done sensitisation programme for the Police and NDIC.So, we keep educating them.We keep enlightening them that this is what it is all about to get them understand that it’s not about MMM.
So that’s one thing that we do and two of our members have written books on crypto currencies and there are quite a number of projects to show that this is not about ponzi scheme.
And lastly, we also have projects that right now you can load on your phone, travel to any country of the world in and spend the cryptocurrency.
Despite your awareness, for a layman, digital currency does not exist because he cannot hold or touch it, he cannot have it in his pocket.How would you explain this for him to understand?
It’s actually quite simple.
It’s like right now, I don’t think I’ve been to a bank in the last one year or two years.The only time I’ve gone to the bank and that was last year when the bank over-debited my account.So, I called them to complain but they said I had to come to fill a form.
Now, I hardly handle cash and the reason is that even the naira is almost digital in the sense that if you don’t have cash with you and you want to eat, with your ATM card, you can use PoS to pay.Now in China, there is even no need for ATM card, once you have your QR code, you just use your phone and app to pay.So that’s even for native currency.
I know about 10 apps that you can use a QR code to pay.Now, that’s where the world is.So, even the native currency has left that place of being physical, how much more the digital currency.
Now, one of the ways that people can use it is we have different cryptocurrencies exchanges even here in Nigeria, we have cryptocurrency cards that even work with the local PoS machines.I have Bitcoin on my cryptocurrency verve card, all I need to do if I want to buy something with it is to use the normal PoS to pay, the seller gets naira, but what I put on the card is Bitcoin.
So, we have actually moved, we have left where we were in 2017.There’s been a lot of improvement in the ecosystem.
And now one of the things that we also plan to do is the work line to also have an instant pay without a card, using QR code.And also we’re working on doing phone to phone.So if you have a phone number, and I have my phone number, I have Bitcoin in my wallet, I can send money to you in Naira, dollar or bitcoin and you cash out immediately.So, it’s an ongoing process.
Now, government is talking about building a digital economy and to reflect that agenda, the Ministry of Communications has had its name changed.How would you advise government to go about digital currency in the new digital ecosystem being built?
Well, Nigeria cannot isolate itself from global best practices.When you have somebody like Laggard, the woman that just left IMF for the European Bank, she has been talking about central bank digital currencies and she has been telling central banks not to underrate or trivialise digital currencies.
If she has been saying this to them, why then would they think that this thing will just go like that? No.The world has left that place.
The world will definitely leave behind physical notes because right now as I talk to you, in China, with the issue of Coronavirus, imagine if there was no digital payment and the use of QR code and they now have to use cash for all their transactions.There would have been a wider spread of the virus because money is a medium of transmitting diseases fast in any system.This is because as I’m giving it to you, it has come from maybe about 2000 places.
So, the earlier CBN latches onto digital currency, the better.I was expecting CBN to have started a digital currency, because one, we currently have an issue, as a nation, with sourcing for dollars for our foreign exchange.And because we have the issue, our best bet is to float a digital currency.We have different ways to do that: Either we back it by oil, back it by dollar reserve, or by any other means.It is for the policymakers to say, okay, we can back this $20 billion by oil, we can back $20 billion by gas reserves.
We have what is called Titan, it is backed by US dollars, it is a currency that is at par with the USD.
One Titan equals $1 it is backed by US dollar, which is deposited somewhere.
So, the amount that will be minted is also the amount that is on the ground.So, if they back it, all they need to do is to release it to whoever is bringing dollars and they send it out to the whole world.So, they come up with that the better for them, so that they will not be at the mercy of going to source for dollars to balance their imports or to sell to BDCs.All they need to do from time to time, is to just use the stable coin for any transaction that they want to do anytime, at any point in time.
Government has tried to distance itself from cryptocurrency by simply advising Nigerians against investing in it.Despite that, many Nigerians are investing and you said you currently do self-regulation in the absence of government’s control.Would you rather continue as a self-regulated industry or you would prefer government to step in and regulate like CBN does for the banking industry?
The truth technology is that there are a lot of limitations to regulation but there are core things that can be regulated.One is KYC-Know your customer, everybody who is doing this must have a KYC.
Before you sell anything to anybody, you must know the person.If you don’t know the person, you must get his/her details so that in case it is illicit money or money from politically exposed persons, money from fraudulent activities like Yahoo boys or whatever, you can be able to say that is the person that gave me the money.We also need AML, which is Anti-money Laundering law.In our self-regulatory system, we insist that our members put all these things in place, so that we don’t have people who are laundering money coming to buy cryptocurrencies.
We also have what anti-terrorism regulation by making sure that our people don’t get themselves exposed to people who use digital currencies for such activities.And the way to do that is that there is a limit, even in government circles; if I come now and I give you N5 million as an individual, you are not supposed to accept it, the limit is one million naira for individual and N2.5 million for corporate organisations.So, we stay within that, and we tell our members if you notice that somebody comes to you in the same day, or even within a particular specified period, and you notice that there is a consistency of transaction, which has snowballed to big money, report that transaction to EFCC yourself.
Now, going back to your question of the kind of revolution that is needed, yes, we can’t operate independently, there has to be some regulations, the one that can be regulated.So, that it has to be a mix of self-regulation, and government regulations.We also need to understand that you can have Bitcoin and government will not know about it.
So, that’s where self-regulation comes in.Now, where government can regulate, they need to come in, but before you regulate any industry, you have to grow it.
So, government has to come in now fully and encourage the people, like what many nations like Malta has done, build the entire industry.Support the guys in the industry and give them funding where they need funding.So, by the time government has done that, then it would know those who are in the system and they can then tax the system.
If government is not there now, how will they be able to benefit when the system has grown? Some people can grow in this system and you won’t know them and they will become super rich without paying any tax..