Nigerian Journal of Banking and Financial Issues (NJBFI)

IMPACT OF CRYPTOCURRENCY PRICE ON NIGERIA ECONOMY

Abstract

This research examines the following economic factors in relation to Cryptocurrencies: The Volume of Cryptos Traded (VTD), the Crypto Remittance (CRM), the Adoption Rate (ADR), the Interbank Rate (IRB), the Monetary Policy Rate (MPR), and the Exchange Rate (EXR) on the Nigerian economy. Using ex post facto research design and data from credible sources including Statista and the Central Bank of Nigeria, these key techniques were adopted; descriptive statistics, unit root test, cointegration test, and econometric model – Error Correction Model (ECM) regression. The result also show that, out of the six indices VTD, CRM, ADR, IRB MPR enhanced the gdp in Nigeria; hence more cryptocurrency activity and adoption has positive impacts on Improving the economy. Particularly, boosting the trading volumes and the remittances through cryptocurrencies improves the financial access, the importance of cross-border payment and investment, and innovation. On the other hand, the EXR affects GDP negatively implying that the domestic currency has a domineering influence over export competitiveness and therefore the economic returns. Therefore, the study concludes that, although could advance the Nigerian economy, and bring the benefits of using cryptocurrencies to the citizens, their usage types have challenges, which they pose to the users and the Nigerian government, which requires proper management. The major findings of the study regarding the correlation between GDP and the examined variables display the prospects of implementing cryptocurrencies, at the same time pointing out the aspects for policy regulation concerning the exchange rates. Some of the recommendations include; policy reforms, going for awareness creation, enhanced risk management, global synergy, promotion of investment and innovations, and monitoring of exchange rates’. These measures therefore seek to get the most out of the use of cryptocurrencies while at the same time reducing the risks associated with their usage that may affect the economic development of Nigeria.