Increasing Bitcoin selloff has seen the adoption of Ethereum, or ETH, surge to 47 percent on the first week of January, for the first time since Nigerian exchanges began to make it available. Exchanges such as Luno started providing direct trade of Ethereum with the naira in 2017.
The cryptocurrency is also enjoying the best run of its life on many global exchanges as more people move their capital from the more popular bitcoin over growing fears of a bubble. Ethereum hit a new all-time-high of $1,417.38 on Wednesday, representing gains of more than 60 percent in a week.
Ethereum is a decentralised platform for applications. It is powered by Ether – a cryptocurrency, which is in turn powered by the blockchain technology. Ethereum and bitcoin differ in purpose and capability. While Bitcoin blockchain is used to track ownership of digital currency (bitcoins), the Ethereum blockchain focuses on running the programming code of any decentralised application.
In the Ethereum blockchain, instead of mining for bitcoin, miners work to earn Ether, a type of crypto token that fuels the network. Beyond a tradeable cryptocurrency, Ether is also used by application developers to pay for transaction fees and services on the Ethereum network.
“Interest in Ethereum has been really high in Nigeria,” said Owenize Odia, Country Manager for Luno in a chat with BusinessDay. “We’ve not only seen an explosion of people buying ETH, but we also see people using it as a way to send money. This might be due to the increasingly high network fees charged by the bitcoin network.
“We expect growth to remain strong, especially as more use cases for Ethereum come to light. Many investors also have the perception that it is “cheaper” than bitcoin, but it is important to note that you can buy fractions of bitcoin (or Ethereum).”
As at time of writing, the price of one ETH to naira was at N545, 522 on the Luno Index.
Bitcoin on the other hand struggled on Wednesday, 3 January, 2018 to go past $14,000 where it has been since late December, 2017. Bitcoin prices touched a high of $16,538 on Monday, 8 January 2018 and were selling at $15,039 on the Coinmarketcap.com as at the time of filling this report. The recovery was buoyed by reports that Jamie Dimon, JP Morgan’s CEO retracted his “bitcoin is a fraud” and Microsoft is once again accepting bitcoin payments after halt over “instability”.
Volume of bitcoin transactions in Nigeria recovered somewhat on the Coin.dance index. Transactions hit $1.456 billion in the past five days, compared with the N1.272 billion it saw in the previous week. As at the time of writing, bitcoin price has dropped to $13,911.70 on the Coinmarketcap.com.
Ethereum recent popularity is driven by growing perception of the cryptocurrency as offering more real world relevance because of large companies that are experimenting with the technology. A consortium known as the Enterprise Ethereum Alliance which includes companies like Microsoft and JP Morgan is looking to develop applications using the Ethereum blockchain.
“Ethereum adoption has been growing,” said Tim Akinbo, co-founder of Tanjola.com to BusinessDay. “It is still mostly speculative but I think there are more Ethereum users today than there were a year ago. Going by the fact that exchanges like Luno have an Ethereum trading pair and Remitano also growing allowing direct transactions of Ethereum for naira, I think it would create a market for more adoption of the crypto.”
Ethereum has also regained its number two position in terms of market capitalisation with a value of $119 billion on the Coinmarketcap index – it temporarily lost the position to Ripple in December.
Ray Youseff, CEO of Paxful, a cryptocurrency firm that is looking to expand its business in Nigeria, said it sees adoption in alternative coins (atlcoins) growing.
“We currently have altcoins as payment methods on Paxful. Some sellers are already accepting ETH for a payment. On a peer-to-peer platform users can trade pretty much anything. We are also working on a new solution – altcoin and tokens marketplace. This will be released later this year,” Youseff said.
FRANK ELEANYA
