The Effect Of Crypto Currencies On The Value Of The Nigerian Naira

Project and Seminar Material for Economics

The Effect Of Crypto Currencies On The Value Of The Nigerian Naira


Abstract


The study the effect of crypto currency on the Naira value aimed to examine the impact of crypto currency of the Naira value, some other objectives of the study are tofind out the impact of crypto currency on currency value of Nigeria, also to examine the nature of the relationship between crypto currency and currency value in Nigeria. The study made use of secondary data, the method of ordinary least square regression was used to test the hypothesis. The study found out that crypto currency has significant impact on the currency of Nigeria. The study concluded that that growth of the currency of Nigeria depends not only in oil sector but hugely on how efficient monetary policy and other policy variable are manipulated. The study made useful recommendation to assist the federal government of Nigeria in decision making and policy generation.


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 coin.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

  1. To determine the effect crypto currencies on the value of the Nigerian Naira

1.4 Research Questions

  1. What is a crypto currency?
  2. What are the effect crypto currencies on the value of the Nigerian Naira?

1.5 Significance of the Study

The increasing wave of crptocurrency into the economy with its attendant effect propels a study of this nature to facilitate better understanding of this new concept

And to determine its effect on the value of Nigerian money

The study shall also serve as a veritable source of information


1.6 Research Hypothesis

  • Ho The Effect of crptocurrency on the value of the Nigerian naira is low
  • Hi The Effect of crptocurrency on the value of the Nigerian naira is high

1.7 Scope of the Study

The study focuses on the appraisal of Effect of crptocurrency on the value of the Nigerian naira


1.8 Limitations of the Study

The research was confronted by some constraint such geographical factor and logistic


1.9 Definition of Terms

Cryto Currency Defined

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;


Chapter Five


5.0 Summary of the Finds, Conclusion and Recommendations

5.1 Summary of the Findings

This research work was set to find out the impact of crypto currency on Currency value in Nigeria. Hypothesis was stated to guide the study. The hypothesis is stated thus: H0: crypto currency has no significance on Currency value in Nigeria.

To evaluate this hypothesis, annual time series data on naira value a proxy for currency value and crypto currency were collected from the year, 1980 to 2017. To analyze these data, simple linear regressions was adopted employing Ordinary Least Squares (OLS) techniques.

This analysis least some interesting results. From the result it was observed that crypto currency has a significant impact on currency value of Nigeria. Also that dependent variable (Naira value) can be controlled by independent variable (Crypto currency) as a result of positive relationship that exists between the variables.


5.2 Conclusion

From the findings, of this study, it was concluded that crypto currency has a significant impact on Naira value. Based on this, any action taking towards crypto currency will have external effect which might be positive or negative depending of the direction of the action since the relationship between the two variables is linear.

Finally, it was concluded that growth of the economy of Nigeria depends not only in oil sector but hugely on how efficient monetary policy and other policy variable are monupulated. Crypto currency can serve as a control variable to currency value of Nigeria.


5.3 Recommendations

From the finding of this study, the following recommendations are made:

  1. Central Bank of Nigeria should always monitor the economic situation of the society before knowing the direction the crypto currency will follow.
  2. Balance of payment should always be checked so as known how to apply the crypto currency.
  3. Financial institutions should always be monitored by government through Central Bank in order to make their operations effective.
  4. Further studies should be encourages from economists and other professionals a like to test the effects of effectiveness of some macro economic tools available to the government for enhancing currency value of Nigeria.

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