Highlights
- With the Nigerian currency devaluation, people are running to other assets, especially virtual assets that can at least hold value over time and cryptocurrency just happens to be one of them
- People lose money in crypto because of FOMO – Fear Of Missing Out
- Cryptocurrency and blockchain technology in general are essentially the future of value transactions
- If you want to retire rich, it’s best to start early and before diving in, you must understand the market, technology, the ups and downs, tricks of the trade, the investment landscape, macroeconomic factors, and everything that affects it
- If you’re 25 to 50, you can take a bit more risk; there’s a lot of time for you to work, earn and recover even if there is a loss
- You should have a long term view, it’s not a get-rich-quick scheme
What’s your view about cryptocurrency? How much do you know about it? Can it help you retire rich? What’s your take on this?
Well, the lack of or inadequate understanding of cryptocurrency has held a lot of people back from enjoying the benefits it brings in the long term. While some hold back from investing in crypto, others go ahead to invest, lose so much and get back out.
Dr Oluseyi Akindeinde, the Co-founder and CTO of Digital Encode Limited emphasised that this loss comes with inadequate understanding of the crypto space, whereas, it can give you a return rate that no other investment in the world can give and is infinitely high and valuable.
Despite the initial ban on cryptocurrency in Nigeria, it still managed to get a boom in the country’s market. What would you say was the responsible factor for this?
I don’t actually think it was banned, what was banned was the financial services sector having anything to do with it, it wasn’t banned in the sense people could not buy or trade but they just didn’t want the bank to be a conduit through which people would interact with cryptocurrency. You’re free to buy it off exchanges using peer-to-peer and impressing transactions but you can’t go through the bank.
If you look at the statistics, Nigeria is probably the second largest country that trades in cryptocurrency by volume. It’s not farfetched, with the Nigerian currency devaluation, people are running to other assets, especially virtual assets that can at least hold value over time and cryptocurrency just happens to be one of them.
Secondly, it is decentralised and stored on the blockchain so it’s not like a bank account where the government can freeze your account or stop you from spending your money. It is actually a digital asset that can be stored on the blockchain and is censorship resistant, meaning that there is no one that can have access to it.
Over time, it increases in value and it will help you preserve access to your funds better because we know the naira is losing a lot of value and in order to forestall that, a lot of people, especially the millennials are investing in crypto. It is easier to buy, unlike opening a bank account. You have to go through a lot of processes, look for guarantors and all.
For crypto, it’s online, open an account with an exchange and you have it already in your wallet. That’s why lots of Nigerians are going towards that digital asset sector.
What about situations where people lose so much in crypto?
As with any market, there are ups and downs. You have to remember that the reason why crypto became very popular is that it started going up in price, when Tesla, Elon Musk and others started talking about it, they brought it to a lot of people’s consciousness.
The truth is, for every market, there’s the up and down cycle just as we have with the traditional financial system. So most people that bought in at the very top have made a lot of money, although there has also been losses.
The requirement is that you buy low and you sell high. The time to buy is when the price is low and the time to sell is when the price is high but you will find out that most people have what you call FOMO – that’s the fear of missing out. When the price of crypto is going up, people are more incentivised to buy, but when the price goes down, they are no more incentivised to buy, they start selling.
They need to wait for the price to come down before buying, and selling when it’s going up.
Secondly, most people should have a long-term view of it. So it’s not something that you want to buy today and sell tomorrow, you must have a year, two years or even three, four years in view. You should think of it as some kind of savings.
Would you say cryptocurrency is an essential requirement in the lives of everyone?
Well, not in the lives of everyone, it depends on your investment outlook. If you’re a younger person, fresh out of the university, you’ve just gotten your first job, there’s room to take more risk. Cryptocurrency and blockchain technology in general are essentially the future of value transactions. If you’re 25 to 50, you can take a bit more risk; there’s a lot of time for you to work, earn and recover even if there is a loss.
It is an asymmetric bet because even if you invest $1,000 in cryptocurrency, the highest you can lose is $1,000 but the highest you can gain is infinity. That money can become $100,000 within 5 years. It’s a bit of a risky play, it’s an asymmetric risk.
With the continuous increase in the dollar rate, should we be rest assured that there would be no loss in crypto investment or there can be a downfall irrespective?
It’s a market, any market, whether it’s a housing market, stocks, shares and bonds, every market has its ups and downs, even business, there’s a market cycle. There’s no guarantee, nobody knows what will happen in future, if everybody knew, everyone would be buying it.
But, if you’re willing to stay long term, if your outlook is anywhere from two years to five years, you can be rest assured that the price will go up because the crypto itself is a definitionary currency especially Bitcoin.
There’s a limited amount that you would have so after a while, you wouldn’t be mining and there wouldn’t be new ones being distributed and the ones in existence would automatically become more valuable. But the thing is that you should have a long-term view, it’s not something that you put money in today, you make money tomorrow and it’s not a get-rich-quick scheme.
Is it possible for a person to leave other jobs and focus on investing in crypto?
Of course, some people have done that. But before I advise anybody to do that, you must understand the market, the technology and what you’re getting into. Just like with everything, if you start any business today, there’s no guarantee that you would make money, but make sure you know the ups and downs, the tricks of the trade, and understand how everything works before you resign from your current job to focus on crypto.
Once you do that and you have the conviction that this is a future then of course you can go for it. There are so many people that have also done it, they’ve resigned from their lofty jobs to start investing in crypto and it’s working out perfectly for them
What is the assurance that cryptocurrency can help a ‘healthy investor’ retire rich?
As I said, you can only do that if you have a long-term view. Taking myself as an example, I started buying Bitcoin when one was less than $500, today, one Bitcoin is over $23,000 so imagine the gain and I started this in 2016. Just within a period of six years, $500 has become $23,000. Imagine if someone had bought 10 for $5,000, it would automatically be worth about $230,000 now. There’s no other investment in the world that would have given you that kind of return.
That’s why I always say if you want to retire rich, it’s best to start early and then it’s also best to be buying and accumulating it in steps, buy like $100 worth or any amount each month, consistently so that you can do what is called dollar cost averaging.
Over a year or two, you would have accumulated so much, just leave it and let it do its thing and by the time you’re retiring at the age of 60 or 65, obviously, it would have increased in value. But it is not a short-term thing, it’s a long term. If you are planning to do it for a long time, you have to start now and you must be consistent with the investment, otherwise, you would not retire rich.
It’s not a get-rich-quick scheme, it’s not automatic that you would become rich but with consistent effort, adequate understanding of the technology, market, the investment landscape, macroeconomic factors, and everything that affects it. Ultimately, anyone that gets in at the right time and is consistent in investment will retire rich.
How do we term ‘now’ as a good time to start when one Bitcoin is over $23,000? How would a graduate earning between N100,000 to $150,000 be able to take part in this?
We can start small. Crypto is like gold; if you want to buy one ounce of gold, you don’t go out to buy the entire thing, you can buy 0.01 ounce first and go up gradually.
For instance, someone that is earning N100,000 to N150,000 can be setting aside N10,000 every month. It doesn’t have to be Bitcoin, Ethereum is less than $2,000 and there are others that are smaller. So you do this for two or three years and let it increase in value. You don’t have to buy one at a go, buy in bits over a period of time.
Is there a best platform to buy crypto from or anyone goes?
There are food platforms but one has to be very careful. There are some licensed in Nigeria — Binance, Gundo, Luno, FTX, Quidax, Bundle, Patricia and there wouldn’t be need for fear that they would crash one of these days. The only thing you should not do is buy from someone on Telegram, WhatsApp, etc, they are full of scammers.
Rather than giving a friend or anyone to trade for you, it’s best you do it yourself so someone doesn’t run away with your funds, it’s not hard at all. Just open an account on Binance for instance, register and all the processes are there to direct you on what to do.
Recently, a lot of cybersecurity issues have been linked to crypto, what are your views with regards this?
Generally there are cybersecurity issues, not just in crypto. Most organisations are also hacked and anything that stores value, hackers are going to target it. What we advise is that you should be careful with how you access your crypto, don’t store your password, there will always be attacks on crypto so it’s a normal thing, just be careful. Most of the exchange too are implementing security measures to forestall those hacks as well.
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