Adoption and sustainability of bitcoin and the blockchain technology in Nigeria

Abstract

The rise of cryptocurrency, especially bitcoin, has opened up a lot of doors in the world of Financial Technology (FinTech) by attracting investors, media, and financial industry regulators. Bitcoin operates on blockchain technology, and its value is not a determinant of the value of a tangible asset, an organisation, or a country’s economy. Instead, it relies on an encryption technique that allows tracking of all transactions. Globally, over $2 trillion has been generated through cryptocurrency trading. Due to these financial prospects, the youths in Nigeria have cashed in on this virtual currency to create employment and wealth. This research investigates the adoption and sustainability of bitcoin and blockchain in Nigeria. A survey method with a non-probability purposive sampling technique and a homogeneous approach was employed to collect 320 responses via an online survey. Descriptive and correlational analysis in IBM SPSS version 25 was used to analyse the collected data. According to the findings, bitcoin is the most popular cryptocurrency, with 97.5% acceptance, and is expected to be the leading virtual currency in the next five years. The research findings will help researchers and authorities comprehend the need for cryptocurrency adoption, leading to its sustainability.

Introduction

The world has moved to a higher sphere due to current technological innovations and advancements in computer science by introducing virtual currency, also known as Cryptocurrency. The Cryptocurrency that has captivated the world of computer science and economics is a digital currency first mentioned by Wei Dai in 1998. Wei Dai expressed the creation of a digital currency using cryptography as a control [1]. In the white paper titled “Bitcoin: A Peer-to-Peer Electronic Cash System” in 2008, an anonymous person or group of programmers known as Satoshi Nakamoto introduced bitcoin, which operates on a digital ledger technology known as Blockchain [2, 3]. Blockchain is a record of digital transactions within a distributed database in which participants share data subject to verification by most network participants, eliminating the need for a central authority [4]. Aside from bitcoin, numerous cryptocurrencies exist, including Auroracoin, Dogecoin, Litecoin, Peercoin, and Ripplecoin [5]. Reference [6] identified Bitcoin as the most popular, with a capital market value of one billion US dollars in 2016. Cryptocurrency is a peer-to-peer (P2P) digital currency system that allows electronic payments from one individual or entity to another while avoiding all forms of financial institutions. Unlike fiat currency, it is highly divisible, virtual, and independent of any higher authority.

The advent of this digital currency has affected several countries in different ways. For example, Nigeria, which is regarded as the most populous country in Africa, is estimated to have over 200 million people and is characterized by a high unemployment rate and a limited enabling environment for entrepreneurship and business ventures. The Nigerian Bureau of Statistics (NBS) published an unemployment rate of 33.3% in the fourth quarter of 2020, of which 42.5% are youths. As a sequel to this, many had to resort to blockchain and cryptocurrency to improve their economic status. Thus, within a short time, Nigeria generated the second-largest volume of traded bitcoin worldwide [7]. According to [8, 9], Nigeria took the world by surprise when it published a P2P bitcoin trading volume worth $1.5 billion in the first quarter of 2021. Similarly, a leading financial information media in Nigeria known as Nairametrics disclosed that in the third quarter, Nigeria published an all-time high trading volume worth $1.5 billion on Paxful (an online marketplace for bitcoin trading). Abiodun [9] further reiterated that Nigeria is in the same ranking as China, the US, and India in Paxful’s P2P ranking.

The number of exchanges in operation and the volume of transactions in Nigeria show that the younger generations are fascinated and enthralled by this digital financial innovation. According to [10], there are approximately twenty cryptocurrency exchanges in Nigeria run by young Nigerians. He also claimed that between 2018 and 2019, an Austin-based job search site saw a 90% increase in job postings for bitcoin, other cryptocurrencies, and blockchain in Nigeria. Despite the economic boost, the government continues to outlaw the use of cryptocurrency, citing illegality and criminality. Regardless of the ban, Nigeria remains the African P2P bitcoin trading leader. Given the sizeable financial yield in bitcoin trading in Nigeria and the ardent benefits of virtual currency, can this financial technology be embraced and continuously maintained?

This research aims at strengthening the investigation into how digital currency is disrupting the financial sector, the relationship between the advantages of cryptocurrency and factors critical for its adoption and sustainability. This study contributes in the following ways:

• i.Highlights on the factors that are considered advantages of cryptocurrency and the factors that are more critical for the adoption of cryptocurrency.
• ii.Empirically substantiating the critical industry areas operators engage in and how it has changed the funding and employment narratives.

The rest of this paper is structured as follows: Sect. 2 presents a review of related studies, a brief on the bitcoin technology and economy, and a discussion of bitcoin’s sustainability. The research questions are presented in Sect. 3. This is followed in Sect. 4, by the research methodology, and Sect. 5 discusses the results of the study, while Sect. 6 wraps up the study with a summary and conclusion.

Literature review

Several authors have used various methods in researching cryptocurrencies’ potential adoption and regulation. The Theory of Planned Behaviour (TPB) model was used by [11] to study multiple behavioural goals for trading in blockchain and cryptocurrencies. The model highlighted perceived behavioural control, personal attitude towards cryptocurrency and subjective norms as influencers to an individual’s inclination to undertake bitcoin trading. To investigate the technological readiness and adoption of digital currencies [12], used Partial Least Squares-Structural Equation Modeling (PLS-SEM) to discover that creative and optimistic people are more interested in learning about new ideas like the adoption of cryptocurrencies. In another study, using linear regression to pinpoint relationships with virtual currency adoption about national development factors that could influence adoption, [13] identified the adoption of digital currency as positively correlating with education, democracy, regulatory quality, and gross domestic product; on the contrary, there is a negative correlation between cryptocurrency adoption, the Economic Freedom Index, and the Corruption Perception Index. According to [14], perceptions of inadequacies in traditional financial institutions drive universal acceptance of Cryptocurrency. On the other hand, government and financial organizations, energy systems, and business people were identified by [15] as the leading proponents of cryptocurrency and blockchain adoption and sustainability. Reference [16] presented a systematic literature review on current stage, open challenges and opportunities of cryptocurrency adoption; identifying three major classifications of cryptocurrency adoption literature namely; quantitative research, qualitative research, and others. Results reveals a deficient study on the factors that notably affects the acceptance of cryptocurrency. Reference [17] investigated factors affecting the adoption of bitcoin investment during COVID-19, using a web-based questionnaire and PLS-SEM 3 to analyse the data. Opinionated behavioural control and a lack of preconceived alternatives are favourable factors to adopting bitcoin investment. Similarly, [18] looked into how Saudi Arabian individuals saw the adoption of cryptocurrencies using the survey approach. They established that acceptance of digital currencies is driven by subjective standards, assumed advantages, and pleasure. Observing that prior research on the factors driving the adoption of cryptocurrencies has primarily focused on individual perception and behaviour. In another study, to comprehend users’ choice in adopting cryptocurrency; using hierarchical decision model [19] recognised investment opportunity, personal standards, commercial acceptance, confidentiality, and universal resolve as the factors influencing cryptocurrency users’ adoption. Reference [20] explored the factors influencing recent cryptocurrency adoption decisions. They identified four fundamental categories such as technical, economic, social and personal factors prompting the use of digital currency, while investment opportunity, anonymity, and acceptance by businesses as a form of payment serve as the most influencing factors. Using the Theory of Reasoned Action (TRA) [21], explored the motivations for cryptocurrency use in Jordan. They discovered that if there is a good attitude supported by positive subjective norms, Jordanians are more likely to use digital currency. In a different study, [22] used the web of Science database to do a systematic review and content analysis on the subject of cryptocurrencies and consumer trust, and they discovered five research trends. The finding revealed a significant literature gap connecting trust theories and cryptocurrencies in a consumer environment. Reference [23] applied behaviour theory and the diffusion of innovation theory to find five factors that motivate Malaysian retail investors to purchase cryptocurrency. Using a quantitative approach and a survey questionnaire and analysing the data with the structural equation modelling (SEM) method and smart PLS-SEM, they identified, compatibility, trialability, complexity, observability, and perceived value as factors affecting cryptocurrency acceptance in Malaysia as opposed to relative advantage and perceived danger, which were determined to be inconsequential. Another study [24] used the questionnaire method to assess the gap between bitcoin acceptance and awareness in Jaipur city. They found that, despite cryptocurrency’s fame, investors are not familiar with the blockchain, and only a few are willing to use cryptocurrency as an investment option due to security concerns. However, they are willing to invest in digital currency in the near future once a clear understanding of the cryptocurrency has been established. Using content analysis of selected papers, [25] conducted a systematic literature evaluation on the blockchain’s ability to improve environmental sustainability from the standpoint of sustainable development goals (SDG). According to the study, writers have been paying more attention to blockchain technologies over the past two years, and the use of these technologies gives numerous chances to build a more sustainable society that is in accordance with the SDGs.

Table 1 shows a meta-analysis of some selected reviewed literature.

Table 1.

Meta-analysis of selected literature Review

No	Authors	Title	Method	Result
1	Al-Amri et al. (2019)	Cryptocurrency adoption: current stage, opportunities, and open challenges	Literature review	Reveal a deficient study on the factors that notably affects the acceptance of cryptocurrency
2	Ibrahim & Saleh (2022)	Bitcoin Investment During COVID-19: The Critical Factors Influencing its Adoption	1. Survey: Web-based questionnaire 2. PLS-SEM	Opinionated behavioural control and a lack of preconceived alternatives are favourable factors to adopting bitcoin investment
3	Alzahrani & Daim (2019)	Evaluation of the cryptocurrency adoption decision using hierarchical decision modeling (HDM)	Hierarchical decision model	Recognised investment opportunity, personal standards, commercial acceptance, confidentiality, and universal resolve as the factors influencing cryptocurrency users’ adoption
4	Almajali et al. (2022)	Factors influencing the adoption of Cryptocurrency in Jordan: An application of the extended TRA mode	Theory of reasoned action (TRA)	They discovered that if there is a good attitude supported by positive subjective norms, Jordanians are more likely to use digital currency
5	Sukumeran et al. (2022)	Cryptocurrency Adoption in Malaysia	1. Survey: Questionnaire 2. SEM; 3. PLS-SEM 4. Behaviour Theory 5. Diffusion Innovation Theory	They identified, compatibility, trialability, complexity, observability, and perceived value as factors affecting cryptocurrency acceptance in Malaysia as opposed to relative advantage and perceived danger, which were determined to be inconsequential

In all of the studies carried out, several of the authors focused more on the reasons why cryptocurrency could be used in different parts of the world. But little attention has been paid to the benefits of this disruptive financial technology in Nigeria, which could lead to its adoption and sustainability considering its advantages and use cases. Furthermore, most of the authors used PLS-SEM and behavioural theories as analysis tools.

Bitcoin and the blockchain technology

Bitcoin is a P2P digital currency that allows electronic payments from one person or entity to another while bypassing all financial institutions. According to [26] and [27], Bitcoin was the first digital currency to exist in 2009. It is an open-source, standards-based technology that uses the internet to record and verify transactions using cryptographic protocols to ensure the safety and security of online transactions. To exchange bitcoin, users create and store private keys with their corresponding public keys (bitcoin addresses) in digital wallets [1]. References [1, 28] demonstrated how to generate a bitcoin address using a cryptographic function known as the Elliptic Curve Digital Signature Algorithm (ECSDA).

The bitcoin address consists of two keys: a private key address and a public key address. The private key is generated randomly without a conscious decision, such as by manually tossing a coin, using a reliable and safe source of randomness. The public key, on the other hand, is a derivative of the private key, with values ranging from 1 to n − 1. The public key is then encrypted using a Secure Hash Algorithm (SHA—primarily SHA-256) and transformed into a logical bitcoin address. The address generated is a unique, fixed-size 256-bit (32-byte) number. Thereafter, a Race Integrity Primitive Evaluation Message Digest (RIPEMD-160) hash is used to generate a 160-bit (20-byte) number that applies to the SHA-256 result. Next is the incrementation of RIPEMD160 with a version of the 32-byte as a prefix. Users are typically presented with bitcoin addresses in Base58 Check encoding with a checksum to avoid errors and vagueness. This checksum is then affixed to the RIPEMD160 hash to generate a 25-byte binary bitcoin address. Finally, the byte string is transformed into a Base58 string using Base58Check encoding to obtain the commonly used and distributed bitcoin address [1]. Each private key corresponds to a single public key, which enhances security. In the transaction portfolio, the sender’s bitcoin address serves as input and the receiver’s address as output when sending bitcoin from one user to another.

Blockchain is a distributed database structure that stores information in blocks that are connected by an encryption technique [3, 4, 29]. According to [30], distributed ledger technology originates from a combination of multiple disciplinary fields, including cryptography, software engineering, game theory, and distributed computing. The blockchain operates in the digital currency ecosystem, so when a user requests a transaction, it is first broadcast to the network of nodes. By means of well-known algorithms, the network of nodes authenticates the transaction and the user’s status. Upon completion of the transaction, the block is then linked to the previous block by a cryptographic process to prevent alteration [31, 32]. The first block is known as the “genesis block” and the next block is connected to it, so it continues forming a chain of blocks. A block can contain a number of transactions, depending on the block size and the size of the transactions. Since there is no central node, a consensus algorithm known as Proof of Work (PoW) is employed to safeguard the consistency of the nodes. The consensus mechanism is the fundamental element of the blockchain network, which guarantees that each participant agrees with the network’s current state [33].

One of the requirements for accessing the bitcoin network is installing the software on a personal computer and joining the network. Any new member has to be admitted and then granted permission to participate in the operations, modification, and verification of transactions.

Bitcoin and the economy

The bitcoin transaction log is kept on a network of computers, and it has a way of rewarding honest who solve a puzzle. To figure out how to solve this puzzle, you need to spend more time on the internet, which increases the amount of cyberspace needed to support and manage this new market. As a result, a new market means more significant economic growth (GDP). According to [34], bitcoin accounts for roughly half of the total cryptocurrency market capitalization, amounting to $136.7 billion as of April 13, 2018. Furthermore, a Bitcoin account can be mined by anyone without a name or a central authority, ensuring privacy and operational flexibility [35]; hence, more people are likely to make purchases and other forms of transactions for ease of use. This disruption in the financial system might subdue the use of fiat money in the few years to come, considering how digital currency is altering the current payment system. Thus, banks’ relevance might diminish by 2026 due to the rise in the use of cryptocurrency and blockchain technology [36]. Since bitcoin is decentralized and not denominated in any particular currency, its value is not a derivative of gold or a function of any central government but rather bitcoin itself.

On the contrary, [36] inferred that the dollar equally affects the value of bitcoin because the open market determines the exchange rate. [5] asserts that bitcoin’s P2P protocol has the potential to expand into regions where e-commerce is impossible, as the risks of fraud associated with international payment systems will be avoided. With the bitcoin international payment system, users can accept or withdraw bitcoins and convert them to fiat currency using merchant processing solutions such as BitPay, but they must provide relevant verification documents. Hence, Bitcoin will significantly alter the dynamics of international trade and foreign relations by challenging other currencies, particularly the dollar, which is the most universally accepted currency [6]. Reference [27] observed that there had been an increase in cryptocurrency trading volume, attributable to the low cost of transactions and the lack of interference from the middleman (bank) or government. According to [37], the cryptocurrency total market value at the start of 2020 was one hundred and forty (140) billion US dollars. By the end of the second quarter of 2021, it had risen to $2.4 trillion [38], with Bitcoin being the first and most popular cryptocurrency with the leading total market value [37, 39]. In contrast to standard financial assets, its value is based on the security of an algorithm that can trace all transactions rather than on tangible assets, an organization, or a country’s economy.

Interestingly, [40, 41] inferred that the ease of international trade for merchants in countries that rely heavily on imported goods will be a great advantage if bitcoin is adopted, as transaction costs of the exchange rate will be averted. Hence, Nigeria, being a heavy importer, will be at an advantage. And, as observed by [42], Nigeria ranks seventh in the Bitcoin Market Potential Index (BMPI) and, in the second quarter of 2020, came tops among African countries trading bitcoin [43]. It was also named the world’s fastest-growing cryptocurrency market, with a trading volume of $34.4 million. South Africa ranks second with $15.2 million. Kenya comes in third place with 7.8 million dollars, followed by Ghana with $640,000 and Tanzania with $600,000 dollars. Furthermore, Nigeria ranked fifth among trending countries in blockchain usage in July 2020, with a percentage increase of 10.7% [44].

Bitcoin trading domain of focus

An entire financial industry emerged within ten years of the publication of the bitcoin white paper, revolving around four major vital areas: mining, storage, payments, and exchange [45]. Bitcoin mining is the process of adding transaction records to the Blockchain of the bitcoin community ledger to confirm and secure transactions, and miners are compensated in bitcoins or paid on commission based on the agreement with the vendors. According to [42], the storage sector, also known as the “Wallet segment”, is a software program used to store and exchange bitcoin, which is protected by cryptography that employs unique keys (bitcoin address). However, the wallet system might be exposed through compromised systems, thus the need for safety measures [46]. The payment segment consists of miners, hoarders, merchants, traders, and consumers. Bitcoin can be used to make payments within a country’s borders and to facilitate cross-border online transactions. The payment ecosystem has been forecasted to grow significantly in the future. Finally, the exchange segment is the most promising in terms of bitcoin trading. Bitcoins are purchased and sold for fiat currency. These four segments have enabled millions of Nigerians to enrich and improve their economic status.

Sustainability of bitcoin

From a broad point of view, sustainability means being able to meet our current needs without making it harder for future generations to do the same. There are three recognised pillars of sustainability; economy, society, and environment, otherwise referred to as profit, people, and planet, respectively [47]. The area of focus in this study is the economy, which has to do with people and profit. There is a growing global use of cryptocurrency as it is made accessible to the public through the provision of platforms that enable digital currency trade, as portrayed by [34]; revealing Kenya to have about seventeen million P2P service users and Tanzania with five million. Similarly, [47] stated that, bitcoin might also be used as an instrument for fighting corruption, as evidenced in Cyprus when the citizens had to convert their fiat currency to digital currency when the government was seizing cash from their bank accounts. Furthermore, bitcoin has been expanded for online use in the purchase of goods and services worldwide from trading platforms such as Amazon, music websites, and software providers [26]. The acclaimed acceptance of bitcoin in the global economy is a positive sign towards adoption decisions. However, the sustainability of the bitcoin currency depends on the ability of the financial world and vested authorities to choose the right and suitable currency.

Research questions

The following questions were raised in accordance with the goals of this study:

• i.In view of the global use and economic benefits of bitcoin, can it influence its adoption decision and sustainability?
• ii.What are the barriers to bitcoin adoption and how may these problems be solved?

Methodology

A questionnaire with a non-purposive sampling technique with a homogenous approach aimed at gathering data from the target participants was employed. The following subsections describe the survey design, data analysis, methodologies used, results and discussions.

Survey design and sampling frame

The design of this survey aims to obtain quantitative data with multichoice and ranking questions where participants choose options that best express their opinion. A non-probability purposive sampling with a homogenous approach aimed at obtaining factual data from the main drivers of digital currency and cryptographic ledger was used. The participants are primarily members of the Blockchain Nigeria user group (BNUG) which is a subset of the Organisation of Blockchain Technology Users (OBTU) within the six geopolitical zones in Nigeria. The BNUG are the primary blockchain operators and holders of the cryptocurrency exchanges in Nigeria; therefore, it is enough to derive generalizations from the survey. The questionnaire has two parts. The first part is about the background information of the respondents, and the second part is about the internal and external factors that affect their work and personal experiences. Google Forms is the tool used to create the questionnaire, which is disseminated through Telegram, email, and WhatsApp. And, a total of 321 responses were received. The questionnaire consists of two sections: the first section dwells on the respondents’ background information, while the second section is on the internal and external factors influencing their practice and personal experiences. Google form is the tool used to create the questionnaire and disseminated through Telegram, email and WhatsApp. And, a total of 321 responses were received.

Data analysis tools and techniques

Microsoft Excel is the tool of choice for organizing and displaying the data. while IBM SPSS application version 25 serves as the statistical tool for providing descriptive and bivariate analysis with transformations and a graphical display of the data. Also, Spearman's rank-order correlation is used as the non-parametric test in determining the strength and direction of the association between cryptocurrency advantages and bitcoin adoption.

Results and discussion

Discussion on the results obtained from the survey are as follows:

Demographic feature of respondents

The demographic characteristics of the respondents, as depicted in Table 3, show 83.5% of the respondents trading in cryptocurrency are male. This gender disparity could be attributed to the females’ lack of exposure and inability to withstand the rigors and uncertainties of cryptocurrency. Similarly, bitcoin volatility and various degrees of risk could account for the gender disparity in the cryptocurrency ecosystem. At the same time, the dominant age group falls between 31 and 40 years (56.1%), and the closest to it is the age range of 18 to 30 years (32.7%). In terms of the highest qualification, most individuals in the cryptocurrency ecosystem are majorly first-degree holders (BSc); the reason could be the very high unemployment rate in the country. Although blockchain and cryptocurrency are operational anywhere globally, most respondents come from the country’s south-western region, with a percentage of 50.2%, as shown in Table 2.

Table 3.

Cross tabulation of gender and region of the country

1. Region		North East	North Central	North West	South East	South-South	South West	Total
2. Gender	Male	10	50	17	31	16	144	268
	Female	0	18	3	9	6	17	53
Total		10	68	20	40	22	161	321

Table 2.

Demographic features of the respondents

Demographics		Frequency	Percentage %
Gender	Male	268	83.5
	Female	53	16.5
	Total	321	100
Age	18–30	105	32.7
	31–40	180	56.1
	41–50	32	10
	51 and above	4	1.2
	Total	321	100
Qualification	GCE/SSCE	15	4.7
	NCE	4	1.2
	HND	14	4.4
	BSC	142	44.3
	MSC	121	37.8
	PHD	15	4.7
	OTHERS	9	2.8
	Total	321	100
Profession	ICT	90	28
	Business intelligence	78	24.3
	Teaching	25	7.8
	Engineering	29	9
	Accounting	20	6.2
	Others	79	24.7
	Total	321	100
Region of the Country	North East	10	3.1
	North Central	68	21.2
	North West	20	6.2
	South East	40	12.5
	South-South	22	6.9
	South West	161	50.2
	Total	321	100

Even though the acquisition of a degree in software engineering or computer science is not a prerequisite for participating in cryptocurrency or blockchain, having a degree will increase the chances of learning and adapting to coding skills, hence improving the chances of securing a job in the blockchain and cryptocurrency ecosystem. Knowledge in the technical field, decentralized applications, smart contracts, and distributed ledger proficiency are some of the skills needed to be a blockchain participant. Hence, most of the participants are holders of PhDs, MScs, and BScs, which, according to the survey, form 86.9% of the population in the cryptocurrency ecosystem in Nigeria. In terms of regional participation, the southern part of the country seems to have a very high involvement rate. The South-East, South-South, and South-West have 69.6% participation, with the South-West having the most outstanding participation. This discrepancy could be due to socio-economic norms against western education in the North. While Table 3 shows a significant disparity in male participation compared to the females in the southwest region, in the northeast there is not even a single female, giving the impression of gender exclusivity in that region.

Experience in the use of blockchain and cryptocurrency

The following subsection features the respondents’ opinions and experience on blockchain and cryptocurrency use:

Cryptocurrency industry area of focus

Figure 1 shows that most of the respondents (69.2%) engage in exchange activities involving fiat currency and crypto currency, respectively. This industry area constitutes the highest trading volume, suggesting in-flows and out-flows from the digital currency ecosystem to the financial market and physical economy. On the other hand, 28.3% of the respondents engage in the payment and wallet segments, while only 10.9% of the respondents are involved in the mining segment.

Fig. 1.

cryptocurrency Industry Area of Focus

The most popular cryptocurrency

Bitcoin is the most popular cryptocurrency, with 97.5% acceptance. While 80.4% of the respondents agree that it will still be the leading virtual currency in the next five years, as shown in Figs. 2 and 3, respectively.

Fig. 2.

Which Cryptocurrency is the most popular

Fig. 3.

Expected leading virtual currency in the next five years

Expectations on the use of virtual currency for consumers across online border transactions

22.4% of the respondents agree that virtual currency accounts for over 10% of consumers’ cross-border online transactions. In comparison, 32.4% believed digital currency would account for 5%–10% of cross-border online transactions, and 25.5% agreed that 1%–5% would account for consumer border transactions. In total, 80.3% of the respondents have a positive outlook on using bitcoin across online border transactions. However, 11.8% could not ascertain whether it would positively affect cross-border transactions. This result indicates a high approval rating for virtual currency for cross-border transactions.

Sustainable use of bitcoin

Figure 4 shows that 42.1% of the respondents agree that the use of bitcoin will rise, while 48.3% believe it will increase in use substantially. On the contrary, 5.3% think it will decline in use.

Fig. 4.

Expected rate of bitcoin use in the subsequent five use

Factors considered to be more critical for the adoption of cryptocurrency

Table 4 summarizes the factors considered less or more important for adopting cryptocurrency in Nigeria. Elements viewed as more important are education about bitcoin and significant retail websites such as Jumia, Konga, and Amazon accepting bitcoin. Other factors considered to be substantial are: that major shopping malls should receive bitcoin, simplified procedures for the purchase of bitcoin, and more secure bitcoin storage methods. Other factors less critical are exposure to websites with bitcoin at checkout, improved government legislation, and government stamps for approval.

Table 4.

Factors considered to be more critical for the adoption of cryptocurrency

Factor	Most important	Particularly important	Above-average importance	Average Importance	Below average importance	Not particularly important	Most unimportant
Exposure to websites with bitcoin at checkout	48	82	62	36	8	38	47
Improved government legislation	65	79	46	29	20	47	35
Education about bitcoin	64	69	74	28	9	27	50
Advertising about bitcoin	28	38	53	64	45	55	38
More stable bitcoin price	35	72	58	48	22	42	44
Major banks accepting proceeds of bitcoin sales	75	83	48	15	16	41	43
Major retail websites (e.g., Jumia, Konga, Amazon) accept bitcoin	92	103	29	12	10	26	49
Major shopping malls accepting bitcoin	79	103	34	18	17	26	44
Simplified procedure for bitcoin purchase	106	83	35	19	9	28	41
More secure bitcoin storage methods	125	68	32	14	7	35	40
Government stamps for approval	59	82	55	28	17	31	49
Transactions savings on bitcoin passed to consumers	79	86	43	21	15	31	46
Better tools for e-commerce merchants	66	100	49	12	17	34	43
Faster transaction process	79	98	45	12	12	37	38
Existing POS systems changed to accept bitcoin	37	74	74	32	18	32	54
Increased payment system and processes	89	102	32	15	10	32	41

Factors considered to be advantages of virtual currency

International acceptance was considered a very high advantage of virtual currency, probably due to the country’s high foreign exchange rate. Other features generally regarded as significant advantages are low transaction costs, anonymity and the lack of a central authority. Exchange risk, theft and hacking, technical hitches, and exchange rate volatility were regarded as severe drawbacks of virtual currencies, as shown in Table 5.

Table 5.

Factors considered to be advantages of virtual currency

Factors	No Advantage	Meagre advantage	Low Advantage	Below Medium Advantage	Medium Advantage	Above Medium Advantage	High Advantage	Very High Advantage	Total
Anonymity	70	11	9	8	30	44	84	65	321
Low transaction cost	55	16	4	6	18	40	107	75	321
No central authority	53	25	10	12	35	52	67	67	321
Low cost for small transaction	54	18	5	8	11	33	113	79	321
International acceptance	50	13	8	3	14	16	61	156	321
Required expertise	56	22	46	52	71	27	22	24	320
Exchange risk	133	28	45	31	22	20	18	23	320
Theft and hacking	155	38	39	24	14	12	13	25	320
Technical hitches	145	37	48	25	18	17	17	13	320
The volatility of the exchange rate	63	24	36	42	56	45	30	24	320

Correlational analysis between factors that are advantages to virtual currency and adoption of bitcoin

A Spearman rank-order correlation analysis was employed to measure the strength and direction of these two ordinal variables. As Spearman’s rank correlation is described using a monotonic function, a scatter plot is first plotted to ascertain the line of best fit and to prove that the data violated Pearson’s correlation. Figure 5 is a scatter plot showing there is no linear relationship. The line-of-fit passed through only a few data points amid numerous data points, proving that the variables are monotonically related. Next is the normality test to prove or disprove the null hypothesis.

Fig. 5.

Scatter plot of the data with line-of-fit

The null hypothesis was tested using the non-parametric Kolmogorov–Smirnov and Shapiro–Wilk normality tests. Ho (the null hypothesis) asserts that there is no connection between the two variables, while H₁ (the alternative hypothesis) states that there is a connection. Table 6 demonstrates no significance, indicating an abnormal data distribution. The null hypothesis has been proven accurate; there is no association between the two variables. Similarly, the result demonstrates a violation of Pearson’s assumption, while Spearman’s rank-order correlation assumptions have passed.

Table 6.

Tests of normality

	Kolmogorov–Smirnova			Shapiro–Wilk
	Statistic	df	Sig	Statistic	df	Sig
Compute AVC = mean (advantages of virtual currency)	0.179	321	0	0.898	321	0
Compute AB = mean (adoption of bitcoin)	0.218	321	0	0.824	321	0

^aLilliefors significance correction

Figure 6 is a box plot of the advantages of Virtual Currency, revealing four outliers. The presence of outliers in a dataset is one factor that warrants rank order analysis that considers the extreme data values.

Fig. 6.

Box plot of advantages of virtual currency

Table 7 displays the result of Spearman’s rank-order correlation, which shows a positive relationship between the two variables of the advantages of virtual currency and the adoption of bitcoin. Hence, the more advantageous virtual currencies are, the more bitcoin is generally adopted.

Table 7.

Spearman’s correlation analysis of the two variables

			Compute AVC = mean (advantages of virtual currency)	Compute AB = mean (adoption of bitcoin)
Spearman’s rho	Compute AVC = mean (advantages of virtual currency)	Correlation Coefficient	1	0.435**
		Sig. (2-tailed)		0
		N	321	321
	Compute AB = mean (adoption of bitcoin)	Correlation Coefficient	0.435**	1
		Sig. (2-tailed)	0
		N	321	321

**Correlation is significant at the 0.01 level (2-tailed)

General views and comments on the factors affecting the adoption of bitcoin and other virtual currencies as international mediums of exchange

In this study, the participants express their views on the factors that could influence the adoption of bitcoin and other virtual currencies as an international medium of exchange. The following section presents the respondents’ opinions, with the exact words of the respondents in italics.

Government’s reason for stifling innovation in cryptocurrency

Some respondents believe the government is imposing constraints on digital currency transactions, citing money laundering and terrorism financing. They posited that the government should seek understanding and ways to make cryptocurrency sustainable by enacting friendly policies to adopt bitcoin. They suggested that the government should recognize and regulate cryptocurrency just like in some developed nations, so that these nefarious activities can be checked and monitored. The following remarks portray the respondent’s opinions:

“A lack of government understanding of how cryptocurrency and blockchain works is stifling innovation. The government should look at the positive side of revolutionary technology, just as the internet has revolutionized the world, and focus less on the negative side, which is inevitable because all good things have their demerits. Fiat currencies have a connection with money laundering, terrorism, drug trafficking, and more. One inevitable thing is that those with nefarious activities will flourish more if they’re banned. History is replete with examples. The government should thoroughly research the capabilities of the blockchain and how it’ll help resolve a lot of inefficiencies within the system. The government should take a cue from the progressive developed world to adopt crypto and its underlying technology, the blockchain”.

Another respondent believes that the government is posing a hindrance to the adoption of bitcoin:

“Government legislation is one factor affecting the mass adoption of bitcoin, especially the Nigerian government”.

Intimidation of fiat currency and ignorance of the workings of blockchain

Other schools of thought believe that many people view digital currency as a threat to the existing fiat currency without understanding its workings and prospects. They also opined that the general public should know how blockchain and cryptocurrency works, and their benefits. The following are comments in the words of the respondents:

“Many people view bitcoin as a threat to fiat currency; they do not see the real prospect in applying blockchain, which they perceive as a means of divulging data. I would suggest that they look into some of the fantastic products it has offered, especially from us: e.g., international health passports, supply chain solutions, banking and finance solutions; and real estate solutions”.

“In a few words, a major factor affecting bitcoin and blockchain technology adoption hinges more on increasing publicity on what it is, how it works and what’s the benefits and risks involved as strategy implementation to educate a majority of the target audience”.

Decentralization

Decentralization is one of the most significant advantages of cryptocurrency. Still, some respondents see it as a disadvantage to the banks because they will not have control over cryptocurrency operations, which will prevent them from earning transaction fees. Hence, the banks will try to work against the prospects and adoption of virtual currency unless specific types of machinery are adopted in which the banks will gain.

Conclusion and recommendations

The goal of this survey is to find out how people in Nigeria use and feel about cryptocurrency, as well as what makes them adopt and keep using cryptocurrency. Based on the responses to the questionnaire administered, a correlational analysis was conducted to determine the extent to which the advantages of cryptocurrencies could influence the adoption of cryptocurrencies, considering the wide usage and volume of returns. The analysis reveals a strong relationship between the advantages of virtual currency, which include low transaction costs, international acceptability, and the lack of a central authority, and bitcoin adoption. This study portrays that the possibility of bitcoin adoption and sustainability lies in the perceived advantages of cryptocurrencies. One of the major setbacks hindering its adoption is the lack of regulation, as banks and other financial institutions were banned from facilitating payments for bitcoin trading. The prohibition increased P2P settlement, which resulted in a 90% surge in bitcoin and blockchain job postings between 2018 and 2019. However, government regulation on cryptocurrency could further enhance its adoption and sustainability. Governments, businesses, and other decision-makers can apply the findings of this study by incorporating the experimental aspects into the creation of cryptocurrency systems and strategies. By regulating the usage of cryptocurrencies, special attention should be paid to security threats so that users are aware of these dangers and know how to protect themselves. Moreover, regulation will help the government generate more revenue internally through taxation. Additionally, if people perceive the new technology's advantages, they are more inclined to adopt it. Therefore, it is essential to give precise system information.

Future scope

This study is limited in terms of the sample population, the methods used, and the nature of the study. The sample population was limited to cryptocurrency exchange operators, blockchain operators and bitcoin user’s ecosystems who already have a deep knowledge of digital currency. Hence, the respondents might be biased in their opinion. Consequently, future studies should extend to a larger population both within the virtual currency ecosystem and outside the cryptocurrency domain. Secondly, a predictive Modeling technique can be used in analysing the data accruing from the volume of bitcoin transactions, which could equally alter the nature of the study.

Funding

The authors did not receive support from any organisation for the submitted work. No funding was received to assist with the preparation of this manuscript. No funding was received for conducting this study. No funds, grants, or other support was received.

Declarations

Conflict of interest

The authors have no relevant financial or non-financial interests to disclose. The authors have no conflicts of interest to declare that are relevant to the content of this article. All authors certify that they have no affiliations with or involvement in any organisation or entity with any financial interest or non-financial interest in the subject matter or materials discussed in this manuscript. The authors have no financial or proprietary interests in any material discussed in this article. There are no conflicts of interest to disclose.