Adedeji Owonibi is a Forensic Investigation Practitioner and Certified Blockchain/Cryptocurrency Forensic Investigator, who has been in the vanguard clamouring for Nigerians to embrace the blockchain technology. In the interview with FELIX OLOYEDE, he x-rays the recent decision of the Central Bank of Nigeria to bar the trading of cryptocurrencies in the country. Excerpt:
What is your position on the ban of trading of cryptocurrency in Nigeria by the Central Bank of Nigeria?
My position is that it is not a ban. I think there is a contradiction in the whole thing. There are two sides to the whole story. Nobody can ban the trading of cryptocurrency globally, because if you stay in your room trading nobody would have an insight that you are actually trading. And nobody has a complete overview of who is on the blockchain. So, the idea of the Central Bank banning the trading of cryptocurrency is actually a misconception. I don’t think that is what they intend to communicate. But what they did was that “Banks you are under our regulatory purview; we discovered that we don’t have an adequate record of people who are transacting on this cryptocurrency. We don’t know the quantum of volume and value of what they are transacting with. So, we want you to stop allowing people to pass through this gateway.” And remember, cryptocurrency is not designed for any bank to be an intermediary. If you look at Satoshi Nakamoto’s whitepaper that brought about Bitcoin, the topic says welcome to the peer-to-peer electronic cash that is not within the control of any central authority, meaning that people having to pass banks is not the ideal for cryptocurrency. That is why I said nobody can stop it. Not even the Central Bank. They alleged they don’t have the power to stop it, they have the power to stop banks from giving services on cryptocurrency until they understand the terrain so that they can give regulations on it.
Is the reason that the Central Bank gave for its action on cryptocurrency that fraudsters were taking advantage of it to carry out their nefarious activities tenable?
It is tenable to some extent. But it is not tenable based on my professional insight into what is happening. It is tenable for a layman, but I do not expect the Central Bank to be a layman in this discussion. It should be expert in understanding the trajectory of money. If I superintend money and money begin to have another dimension, I believe the Central Bank should have an understanding of how this new money works. How does it translate to becoming decentralized? How do people interact with it? How do people buy things with it? How do criminals interact with it? How do criminals conceal their illicit transactions through it? And behind they would have built their capacity to also know who the bad actors are whom they complained about in the memo. The complaint in their memo is, for me, the admittance of incapacity. I am a professional in cryptocurrency investigations. I am a certified forensic investigator. And I know that the bad actors using it we can take them down. And this is on my own level as an individual. In our company, A&D Forensic that services we give. So, we give law enforcement the capacity training, we do investigations for cryptocurrency infractions, we tracked them down to wherever they take it to until we link you to a place where you are trying to exit to turn to cash. So, if at the level of a small firm in Nigeria, which happened to be the only firm within Africa sub-region that does this, the central banks should have been able to build bigger capacity with the resources at its disposal, and the experts within the central bank. That example, in answering your question is not tenable.
So, what does the country stand to lose by the statement from the CBN?
A lot. The country has got so much to lose. Most of the countries are facing a particular direction. And it would be a disservice for your own country to face the opposite direction, meaning there’s a new thing happening. Everybody is running a race to lash into the opportunity it has to offer but you decided to choose the other direction. And that is what I believe. If you say you ban cryptocurrency, the implication is this: you ban other small businesses starting up, you ban some other FinTech applications and the cryptocurrencies that are running with it. And a lot of businesses that are built within the ecosystem of that cryptocurrency all will go under. If you take Binance, for instance, (Binance is the largest cryptocurrency exchange), immediately that happened, they said, “We are going to shut down Naira gateway.” So, people that have their money, they have it stuck in Binance and they could not withdraw. If you have your money locked up, you can imagine the economic consequences of you’re not able to actually have access to your money just by a fiat directional policy taken. And that is just one. A lot of companies are springing up if it’s not, these companies are in the 1000s. As I speak with you in Nigeria. It is a blossoming ecosystem. We have people doing exchanges, we are people in the financial services, we have people who are under consulting, like ourselves. And all this thing is we are building stuff around using cryptocurrency to run some systems that we believe should work and are efficient. In that sense now if you say stop. Because we are legitimate, we need bank operations for us to upload money, to deposit money for it to run, we are hampered and therefore, the innovation is killed instead of also bringing the ecosystem to grow in the country and generate income for this country. Like I tell people, I say look a lot of young people in their millions are earning their daily living by trading cryptocurrency. They make 100,000, some of them 100 euros or dollar. Some of them make $50 per day. And they could feed themselves and feed their families. But if this happens, of course, they will go under. So, probably these people that can easily make $50, $100 and cash to their banks and withdraw from their bank, they cannot do that, so they go under. And if it’s not possible and become very difficult, they probably will begin to do some negative things that will add to the unemployment that we have. It is employing 1000s of people. I know a lot of people that are not doing anything outside cryptocurrency trading and withdrawing to their banks and depositing the money back and trading and making a lot of profit that will pay minimum wage in the next 10 years for some people. So, young people have found economic empowerment. So, stopping it would be like just abruptly taking the life out of them. So, that is a very serious implication economically, if you ask me. I have taken you through the trajectories of businesses losing, trajectories of businesses not able to function, trajectories of banks not able to make those volumes that they are seeing and a lot of things like that. People will even lose their livelihood. So, you can see the bigger impact would be people delving into crime because they have no livelihood. So, it has other bigger consequences apart from other countries who are your contemporary looking at you as not very serious, because every one of them is running a race to see how can this be check? How can we not leave this space for criminals to take over? So, what I’ve seen is like the central bank seeing that armed robbers are coming into this house, and there’s nothing I can do, I just leave the door open and I just run away from the house. So, they will rob the whole property in the house. If there are criminals and money launderers in this space, you are supposed to build capacity, fortify your door by the example I give you. Fortify your put security doors, check everything, fence your environment, and put cameras to see who is coming that is an intruder. So, if you do not do that, and you just leave the house, later the criminals will take it at their operating theatre and that is what is going to happen in Nigeria if they know that the authorities- the police, the EFCC, the ICPC and the central bank, have no capacity to check the infractions that they mentioned in that memo. They will hibernate in Nigeria as a criminal because they know they do not have the capacity.
Do you see the CBN reversing itself on this issue anytime soon?
Of course, very soon they will come out and make some clarifications. I’m also believing that they will have to tell the public they are not banning cryptocurrency, but they are banning the banks from dealing on until they can know what the banks are doing. Who is passing money to the banks and license them to actually operate? You see, the day we banned here, USOCC was licensing other banks to study cryptocurrency. Yesterday that cryptocurrency was banned in Nigeria, the world richest man decided to put his bet of 1.5 billion US dollars on this same thing that you are banning. So, it is telling you that Nigeria as a country cannot afford to go in the opposite direction. You know, because this cryptocurrency is a currency that has come to stay, the currency that will continue to live. It is a currency that cannot be stopped. And central banks around the world are looking for opportunities to compete in doing what they call the CDCBTC, central bank digital currency. And China is ahead they have done this and the US as well. The central bank has a middle ground to take advantage of this and issue out a digital dollar that will run on a blockchain, compete with this cryptocurrency that the young generation are using and be able to compete favourably. So, it is something they have to do, and they have to do that urgently.
How will you value the quantum of cryptocurrency transactions in Nigeria?
A lot of people are doing volumes. I just checked it this evening and I saw a volume on one exchange over five billion US dollar have been transacted just today, even with the central bank ban. Just today, on Binance, for instance, this is just one exchange among 33,000 exchanges where cryptocurrencies have been exchanged around the globe. If you just go to coin marketcap.com, you will discover that over 33.8 or thereabout exchanges are trading cryptocurrency and we have over 8000 of these cryptocurrencies in circulation with over $1.3 trillion market capitalisation. So, the whole thing is growing. It is not waiting for anybody. So, when you make a statement, people who are supposed to lash on to these opportunities to actually do innovation, to actually spring up businesses that will bring dollars into this country, they’ll go under and that is a bigger economic consequence.
Why is blockchain technology not growing fast in Nigeria?
It is growing.
Can you compare us and our peers?
Of course, no. We are working. We are actually not left behind. I think we are if not very close to our peers, we are really doing something. Take, for instance, I also superintend over another company called Convexity and it is based out of Nigeria and we have blockchain solutions already solving local problems. For instance, the issue of palliative- who got palliative and who did not get? Who locked up palliative and all that? We came up as a company and said, we believe that blockchain is the ledger that we call the truth machine. So, if it is the truth machine, why cannot we use it to track aids going to vulnerable people, from the person that discharge it to the last person that will see it because it is indelible. You cannot delete it; it is transparent. And we came up with a solution called Convexity humanitarian a transfer solution. And with this solution, we are saying that virtual cash assistance to vulnerable people can be tracked. So, it Bill Gate Foundation gives 100 million today, using our solution he will be able to see that local vulnerable got it, what they bought with it, who got it. And the issue of somebody collecting one palliative and locking it somewhere is traceable. So, these are some of the job advantages. And this is just from us. We have two solutions, and we are running a lot of solution. Within Nigeria have a countless solution in this same blockchain. We just need the ecosystem for them to be visible. This evening before I left work, there’s another company called House Africa. And House Africa is building a solution for our landed documents that will not be indelible or not be queried and it is using blockchain to do that. Already they’re having partnerships with Federal Mortgage Bank, Mortgage Refinancing Company, and this is Nigerian company. So, you can see the ecosystem is bigger than it is, we just need an enabling environment for them to prosper and achieve things that will solve our problems.
The issue of cybersecurity in the country, does that pose challenge to cryptocurrency or blockchain technology?
Well, blockchain technology depending on the type of blockchain. if you take Bitcoin blockchain, for instance, it is difficult for you to hack Bitcoin blockchain. It has been left without authority, without a central owner, without an office, without a founder in the past 10 years or 12 years or thereabout that it has been running. All hackers have tried and failed. Why? It is because it is difficult and expensive for you to go and hack it. But when you come to the other point of the individual, yes. At the point of the individual, cybersecurity must be a serious thing that we have to educate people on because your private key that is like your password, or your bank account can be stolen from your computer or your phone because is the same way that your computer can be hacked. The blockchain is not hacked but your computer has been hacked and the person just goes to blockchain and access your money. So, some of the security is an issue and something that people must be knowledgeable about. And it is something that everybody has to be very conscious of.