Over the past few weeks Bitcoin has been on an unmatchable trajectory, topping over $55,000 USD for one Bitcoin. Almost everyone in the USA now knows the word Bitcoin (and for those that don’t, they’re about to) but this isn’t just affecting America. Bitcoin is currently making waves worldwide, and not all of them are good.
While Americans are trading their Bitcoin for $55,000 USD, the Nigerians are trading 1 BTC for $76,000 each…yes you read that right. The Nigerians, because of the difficulty of trading cryptocurrencies in their country are currently trading BTC for $20,000 USD above the valuation. So, what’s happening?
If you’ve been following the MintDice Blog for an extended period of time, you probably previously read an article in which Nigeria was discussed as wanting to become a cryptocurrency capital of the world, and that they were working hard to implement the new technology ahead of other nations.
Well, unfortunately, the tables have turned. On February 5th, the CBN (Central Bank of Nigeria) issued an executive order that all financial institutions in the country must end their relationships with cryptocurrency companies. Why the government had such a sudden 180-degree change when it comes to cryptocurrency policy is unclear, but it isn’t causing the Nigerians to stop purchasing cryptocurrencies, in fact, it’s only drives up prices as companies rush to fill orders that now must be filled via international exchanges.
Chiagozie Iwu, who is the CEO at Naijacrypto, a cryptocurrency exchange, says the ban has had massive implications for his own business, as well as the country of Nigeria as a whole. Deposits dropped 80% at the initial announcement of the ban. They have since recovered, but are still 20-35% lower than their previous levels. But it isn’t just his exchange which is suffering, since it has become so difficult to get Naira to international exchanges to make trades, this has opened up a lot of arbitrage opportunities, especially with Bitcoin being valued at so much higher within the borders of Nigeria. This has led to a situation which Iwu equates to the “Wild West” as money is dangerously moved around under the nose of the Nigerian government. But despite how crazy it is now; he’s hoping that the Nigeria government will reverse their decision again (which is likely) and things will go back to the way they were.
The International Monetary Fund (IMF) representative for Nigeria, Ari Aisen has called for the Nigerian government to fix the issue so that the Bitcoin exchange rates will once again be equal. But as of the posting of this article, nothing has yet been done to solve the problem.
Historically, Russia has been known as a country which has outright banned the use of cryptocurrency. Well, Russian citizens are allowed to purchase the coins if they wish, but they cannot use them to purchase anything. And this law just went into effect on January 1st, 2021.
So why did Russia receive a large shipment of Bitcoin mining equipment in December 2020? According to one Russian news source, a data center located in Irkutsk took the delivery of almost 20,000 devices (shipped in 14 trucks) which are estimated to have a power capacity of 70 megawatts. The owner of the data center, which received the shipment, says the rigs were set up shortly after their delivery to mine Bitcoin.
This means, that even though cryptocurrency is currently illegal for use in Russia, the Russian government clearly recognizes the power of this coming technology and wants to get in on the action. And this also means that the Russian government will likely directly benefit from the mining of Bitcoin, instead of its people. The law could be changed, but since the new cryptocurrency law just took affect about two months ago, it’s unlikely it would be immediately repealed—but maybe as Bitcoin continues to grow and his new heights the Russian government will change its mind.
Despite all the doom and gloom on the Eastern hemisphere, things are going quite swimmingly in the west. Most notably in Canada where two different Bitcoin ETFs were approved last week.
One ETF is sponsored by Evolve Funds Global Inc. and the other was created by the Ontario Securities Commission. These ETFs are set to launch on Thursday, February 25th, and will be available for purchase on the Toronto Stock Exchange. Evolve is offering two choices for their ETF, and investors can purchase either the hedged, or unhedged units. The CEO of Evolve indicates that these ETFs will be a good way for people to gain a little cryptocurrency exposure without subjecting themselves to the same level of risk as actually owning the coin. He does add, however, that the ETF will not seek exposure through derivatives or futures contracts, and that all funds will be backed by settled Bitcoin holdings which are held in cold storage wallets.
This puts Canada worlds ahead of the United States where several Bitcoin ETF proposals have been filed, but to date, have not been approved. But Canadian cryptocurrency supporters have high hopes for their neighbors to the south, hoping that a US Bitcoin ETF is right around the corner for the US stock market.
Canada isn’t the only Western hemisphere country to make waves this week, as Mexico announced new plans to catapult their country into the cryptocurrency world. In fact, the Mexican government recently released a statement encouraging its citizens to treat Bitcoin as a savings account for wealth.
Not only that, but the Mexican government is working fast to instill confidence in Bitcoin in its retailers so that hopefully the coin can be used on a widespread basis to purchase goods and services soon. And with these discussions, Bitcoin buying has risen tenfold among Mexican financial firms, possibly contributing to the price hike seen in Bitcoin this past week.
Of course, Bitcoin is still new technology for most of Mexico, and widespread acceptance may take some time. But unlike other governments, the Mexican government is prepared to back the technology in order to bring it to new heights.
Around the world governments are finally realizing that Bitcoin is here to stay, which means this recent price hike could just be the beginning of a massive growth trajectory for the coin. As countries continue to inflate their own currency, people all over the globe are liking Bitcoin’s hedge against inflation more and more. Only time will tell how this cryptocurrency will continue to grow and shape the new emerging world economy.
Bitcoin is a cryptocurrency, a form of electronic cash. 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.