Transactions in cryptocurrencies are largely speculative, volatile and should be discouraged, the Central Bank of Nigeria (CBN) says.
The apex bank gave the explanation in a statement on its official website, by Mr Osita Nwanisobi, Acting Director of Communications.
The explanation is coming on the heels of widespread reactions to the CBN’s recent directive prohibiting cryptocurrencies transactions by Deposit Money Banks (DMBs).
Nwanibosi stated that the nature of cryptocurrencies created a perverse incentive that allowed for speculation and volatility
“Evidence now suggests that some cryptocurrencies have become more widely used as speculative assets rather than as means of payment, thus explaining the significant volatility and variability in their prices.
“Because the total number of Bitcoins that would ever be issued is fixed (only 21 million will ever be created), new issuances are predetermined at a gradually decelerating pace.
“This limited supply has created a perverse incentive that encourages users to stockpile them in the hope that their prices rise.
-THE GUARDIAN (NG)