There are different advancement in money payment procedure in today financial market, a lot of which are built on platforms computerized like the mobile phone, the Internet, and the digital storage card. These methods have provide alternative payment systems that have encouraged and even improved the growth, from the likes of PayPal, Apple Pay, Google Wallet, Alipay, Tenpay, Venmo, M-Pesa, BitPay, Moven, BitPesa, PayLah!, Dash, FAST, Transferwise, and others. With the ever increasing population in Nigeria, there’s a need to integrate a payment systems that depend on fiat currency, the developing utilization and growth of digital currency across the globe is increasing, and it allows for faster, more flexible, and more innovative payments and ways in for financing goods and services. One digital currency, however, stands out among the rest. Bitcoin is one of the most notable advanced digital currencies today. To be precise, Bitcoin is a cryptocurrency, which is a subset of what is commonly known as a digital currency. Bitcoin is a unique cryptocurrency that is widely considered to be the first of its kind and can be introduced into the banking institution in Nigeria This research introduces the significance of bitcoin into the banking industry in Nigeria and how it can improve seamless transactional features of Bank customers.
1.1. BACKGROUND OF STUDY
Although bitcoin is often referred to as a decentralised digital currency, think of it as an electronic asset. This sidesteps questions around which government backs it and who sets the interest rate, which are often a mental block in understanding bitcoin. As an electronic asset, you can buy bitcoins, own them, and send them to someone else. Currently there are around 14 million bitcoins that have been created, increasing by 25 bitcoins every 10 minutes or so. There is an agreed upon limit, of 21 million, the last of which should be created a little before the year 2140. Bitcoin transactions from account to account are recognised globally in a matter of seconds, and are usually considered settled within an hour. Bitcoins have a price, which can be in any currency, but is usually in USD. This price is set by normal supply and demand market forces in marketplaces with traders, just like with oil or gold. Bitcoin is just like any other international currency whose ‘home ground’ is the internet, as opposed to any geographical location. Put another way: if the internet were a country, bitcoin would be its currency. For the first time we have an entirely digital asset which can be controlled by the end user, without requiring an account with an institution. Payments of bitcoins can be made from one person to another, irrespective of geographical location or jurisdiction. Payments are relatively fast – the initial notification is within seconds, and it ‘settles’ in about an hour. In circumstances where the typical monetary framework is deficient, it very well may be a helpful method for moving an incentive to any individual who have access to the internet. The ultimate goal of Bitcoin, according to its advocates, is to serve as an alternative to the existing payments system in many developing countries like Nigeria and to enable transactions across national borders and currency denominations without the interference of sovereign entities or central banks, and without the alleged exploitation by traditional financial intermediaries such as banks. From the viewpoint of supporters of virtual currencies, national governments often impose undesirable controls, such as restrictions on convertibility, while central banks may facilitate an oversupply of currency, leading to hyperinflation. To utilize a bitcoin, a client presents her record number ("open key") and secret key ("private key") for check on the open exchange record, known as the '"square chain." Individuals ("excavators") utilize their registering capacity to confirm that the exchange is genuine by taking care of a computationally concentrated issue (finding the "hash" of a "nonce"). In return for verifying the transaction, the first individual to post the solution to the problem is rewarded with a given number of bitcoin, adding to the stock of bitcoin and hence constituting money creation.
1.1.1 Bitcoin as a Means of Payment
Since the express purpose of Bitcoin’s payment innovation is to serve as a major alternative to transact with one another without the involvement of sovereign entities like the central banks, or other banks, According to top financial economist, they generally consider money to be an instrument that serves as a medium of exchange, a unit of account, and a store of value, and bitcoin offers this oppotuinity and fills in as an elective type of cash that operators can use to execute with each other without the association of sovereign substances, national banks, or banks, one normally asks: how well has bitcoin served the capacity of "cash"? Financial experts by and large believe cash to be an instrument that fills in as a vehicle of trade, a unit of record, and a store of significant worth.
1.1.2 Keeping Track Of Payments: The Bitcoin Blockchain
A network of computers keeps track of bitcoin payments, and adds them to an ever-growing list of all the bitcoin payments that have been made. This list is a file called “The Bitcoin Blockchain”, and sits on thousands of computers across the world. When you read the word “blockchain”, think “database” or even “list” and you have the right kind of idea. This file contains data about all the bitcoin transactions, payments of bitcoins from one account to another that have ever happened. This is often called a ledger, a term found in accounting. A bank’s ledger keeps a record of payments between bank accounts.
1.2 STATEMENT OF PROBLEM
Our financial institution in Nigeria is filled with different lapse which the introduction of crytocurrency can solve as already mentioned, there are some key attribute that sells Bitcoin over tradition currency, for instance lower transaction costs attracts consumers since it does not require intermediaries who must eat profit. Also, bitcoin is a widely accepted form of payment across the globe, which makes it an important form of receiving payment for goods and services, there’s a significance need to integrate bitcoin in our daily transactional needs in Nigeria.
1.3 AIMS AND OBJECTIVE OF THE STUDY
The major aim of this paper is to understand the significance of introducing bitcoin into Nigeria’s financial institution and how it will be implemented as a means for transaction procedure. This aim is proposed to be fulfilled through the following objectives:
1. To introduce bitcoin as a means of payment for goods and services across Nigeria.
2. To understand what kind of impacts bitcoin transactions would have on traditional transaction system.
1.4 SIGNIFICANCE OF THE STUDY
Bitcoin is the result of several decades of research in the field of distributed systems and cryptography. This concept is based on a series of innovations that have led to a powerful solution: a peer-to-peer decentralized network (represented by the Bitcoin protocol); a register of the public transactions (represented by the blockchain, a transaction database that is shared by all the nodes participating in a system based on the Bitcoin protocol); a decentralized, deterministic and mathematical system for issuing the currency (through the distributed mining); a decentralized system of transaction verification (the transaction script). Bitcoin uses a peer-to-peer computer network, each computer being a node that runs a specialized software. Unlike the centralized systems' case, in which the control belongs to a small group of people or to an institution, in the case of a peer-to-peer network, the changes can occur only after most of the involved parties have agreed upon a decision. Sometimes, in certain situations, this condition is not sufficient, as a minority that does not agree to these changes is able to prevent them. If the majority still forces the implementation of the changes, this could lead up to malfunctions of the entire network
1.5 LIMITATION OF THE STUDY
Bitcoin is one of the world’s leading new entrant in the digital cryptocurrency markets. As a result, limited information and data regarding Bitcoin is found with regard to the past studies. Therefore, a gap exists due to the limited information and previous research conducted on Bitcoin as a form of cryptocurrency. In this research, the effects and impacts of Bitcoin on the traditional transactions are examined and analyzed accordingly. The research focuses on the significance introduction of Bitcoin transaction as a means of accepting payment for goods and services in Nigeria.
1.6 DEFINITION OF TERMS
- Bitcoin: It is a decentralized digital currency without a central bank or single administrator that can be sent from user to user on the peer-to-peer bitcoin network without the need for intermediaries.
- Cryptocurrency: is a digital asset designed to work as a medium of exchange that uses strong cryptography to secure financial transactions, control the creation of additional units, and verify the transfer of assets.
- Currency: a system of money in general use in a particular country
- Transaction: relating to the conducting of business, especially buying or selling.
- Decentralized: move departments of (a large organization) away from a single administrative center to other locations.
- Intermediaries: a person who acts as a link between people in order to try and bring about an agreement; a mediator.