Blockchain for Finance: A Perfect Solution for Nigeria’s Fintech

When users are in control, their data identity, transparency, portability, and interoperability are well protected.

Williams Shakespeare once wrote, “Better three hours too soon than one minute too late.” And that quote still leads to what makes any technological idea relevant.

Technology has made many things easy by making ideas become a reality. Data-driven startups are gaining an audience due to the collection, procession and storage of information.

Data are important shots in the tech industry. However, information such as money, valuable assets and privacy should be our biggest concern. The higher the data safety your brand or idea solution promises, the longer consumers stay and pay.

Fintech has been able to thrive due to the increase in mobile phones and access to the internet. The financial sector isn’t relenting in improving its stacks to stay ahead of others. As technology improves, adopting financial services as a business is on almost everyone’s mind.

You and I, as consumers, are looking out for a better solution—a solution that makes information communication faster, more reliable and more accessible. And I am sure creating  web3 and blockchain for finance will make it possible.

Nigeria’s Fintech Industry

Recently, the Nigerian finance ecosystem accommodated many startups, which have contributed to the revenue generated by the country. 

Fintech is a tech tool created to ease the provision of valuable financial services. And the higher the quality produced by respective banks, the more your customers.

Immediately, there is a break in trust, we tend to move to a more trusted body that can give the right experience and handle our information. The Fintech industry under the financial sector consumes the most data compared to other sectors like e-commerce. This is because even e-commerce needs to transact money (payment from buyers) using a financial service.

The analysis made by the Nigeria Startup Ecosystem Report, 6 out of 10 start-ups are Fintech, and they generate three times more funds than their other challenger. Nigeria has experienced rapid technological growth in the financial and e-commerce space. Flutterwave and Jumia are perfect examples.

Back to the financial ecosystem, the CBN ordered that all accounts held by people or organisations conducting business on or running cryptocurrency exchanges be closed.  Although it does not overtly prohibit trading in virtual currencies, the consequences bounced on how cryptocurrency transactions are carried out locally and cross-border.

These restrictions caused major havoc to the crypto payment services, resulting in users resorting to peer-to-peer mechanisms for exchanging cryptocurrencies.

Read Also: The Evolution of the Fintech Industry in Nigeria

Benefits of the Blockchain Payment Structure

Let’s use Bitcoin as a case study due to its popularity in the blockchain payment structure.

These are benefits generated since the creation of Bitcoin, which other payments can imitate and improve.

1. No check backs

Every enthusiast should know that transactions are irreversible in the blockchain network, meaning no man can step into your account to fix a mistake.

And the bitcoin myth page states that CHECKBACKS means “We are giving another individual to steal our information.”

We either take full responsibility and ownership of our information or fraud protection. Unfortunately, we can’t have both.

Practically, web3 businesses, users, and financial services expect errors to be reversible. But in the blockchain ecosystem, no check backs are a nice feature that has and will continue to help the space grow.

2. Full ownership features

Crypto users are familiar with the “secured with math” feature. Currencies are secured cryptographically.

You are your boss in the system. You take charge of your technology and data security. Although your cryptocurrency companies have managed your information, your information know-how depends on you.

No central authority, nobody toys with your money, and no boss gives some unnecessary rules regarding your information.

3. Remittance

While people pay Western Union to manage their transactions, blockchain developers keep finding a better solution for users to transfer money from a long mile with low conversion fees.

But it can be possible if only cryptocurrencies like Bitcoin can be universally accepted as an international currency.

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Downsides of Centralized Infrastructure in Blockchain for Finance

1. Limited supply

In terms of limited supply, the gold standard is comparable to blockchain-backed currencies. And this is because they are deflationary.

There is a decrease in the general price when the demand is low and vice-versa. This indicates that there is certainly no incentive to spend our cryptocurrencies if they are worth more.

2. Delay in money transfer

The bitcoin blockchain operates at 1Mb per block compared to PayPal and Western Union, which uses 115TPS and 29TPS as at 2014 and 2013.

Various reasons are assumed, and different excuses are put for the electricity wasted on mining the coin. Compared to how conventional money is printed.

This feature makes transferring currency very slowly, but developers in the web3 space are working hard to solve it.

3. Economic equality

One of the confusing questions in the blockchain space is equality characteristics.

The centric and decentralized dudes are still curious about what can happen if monopoly is removed from our issuing money.

Nationalism was supposed to be backed by the state to create consensus and enforcement in a system. 

Removing monopoly is still believed to be an assumption because we don’t know what can happen if a state doesn’t issue authority

P2P Solutions in Blockchain for Finance 

Sophisticated decentralised financial applications have been built not just for payment methodology but also to solve issues such as; 

• Privacy-preserving payment system
• Peer-to-peer exchanges
• Peer-to-peer insurance
• Peer-to-peer lending and credit 

Plus, other peer-to-peer derivatives. They are unlimited.

With the above solution, decentralised applications are ready to mitigate the current inefficiency of the centralised financial world. An example of such inefficiency is the inability to secure customers from being stolen.

Decentralised financial ecosystems are built for accountability, transparency and financial market capability. 

Afriex and Lazerp00ay are examples of blockchain digital payment systems, although Lazerpay is a blockchain software brand. This blockchain start-up makes payment easy for both decentralised and centralised users.

Read Also: How Small Businesses Can Benefit from Fintech Companies in Nigeria

Future of Money in Blockchain for Finance  

1. Payment

In a data-centric world, payment infrastructure is built by third parties or solution providers, e.g. PayPal, which gives them full authority over your information. Fortunately, payment methods are loaded with transaction fees, unreasonable delays and hurdles in the financial world.

2. Regulatory and legacy regime

There’s no way we want to discuss money, and CBN won’t be involved, right? They are the bodies that make the so-called necessary regulations regarding money transactions in Nigeria.

One of the significant issues blockchain for finance tends to solve is the unappreciated attitude of bank users, especially banks in rural areas. The Urban users are not also left out. Due to government restrictions, some also find it hard to get loans from both local and digital banks.

In the decentralised world, smart contracts help solve and regulate policies. Remember, blockchain methodology is P2P.

Read Also: Fast Introduction to Blockchain and Cryptocurrency for Nigerians

3. Security

No matter what you’re building, security is paramount. Handling data security is complex, but If you’re willing to stay in the tech market, you’d better find the best and most reliable solution.

Nigeria’s fintech industries are improving day-to-day, using different tech methods for their brands’ data security. But the question is, are any of those stacks okay for a long-term security solution?

If we’re all planning to fix any payment loopholes concerning security, blockchain for finance is a perfect decentralised solution. How?

If you have heard about POW (Proof-of-Work)? 

It’s a reliable blockchain network, which practically states that; Manipulations can ONLY be done if a single person or an individual can control the majority computing power or hash rate, which is technically impossible.

“No outside attack has been performed on the Bitcoin network”.

Conclusion

Blockchain is here to fill the void left by centralised banks and other factors dissatisfying many banks’ customers.

Decentralised apps are accessible and designed. And as far as blockchain for finance and any other decentralised is concerned, the connection is made globally, and so far, an internet connection is available.

Although the tech is still in its infancy, improved decentralised solutions are universally available, and many decentralised ideas are generated daily.

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About the Author

Kehinde Sodiq is a freelance blockchain SEO content writer. He writes content for web3, cryptocurrencies, blockchain & Defi projects. He believes in crafting clear content that attracts the right audience. And also satisfies the search engine algorithm to boost audience visibility.

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