In March 2019 the Nigerian government banned access to foreign exchange for textile businesses. This put textile manufacturing firms in Nigeria in a tight spot because they could no longer get the Chinese Yuan they require to pay for imported textile materials to produce their goods.

Some of these importers turned the to the crypto currency bitcoin as a way of paying their suppliers in foreign countries. It was a solution and it seemed to work.

Nigeria is now one of the leading bitcoin trading nations in the world with $2.5 billion of the crypto currency being traded officially. The true value of bitcoin trading is likely to be much higher as so many digital currency transactions are unrecordable.

A range of factors are fuelling the rise in crypto currency trading in Nigeria such as political influence on foreign exchange markets, government repression of businesses and rising inflation. Bitcoin can be used by businesses and individuals to manage these problems.

A similar rise in crypto currency trading is being played out in economies all over the world and governments are struggling to react to the rise of digital currencies and how to control them. Egypt, Turkey, and Ghana are all trying the regulate crypto currencies in their economies.

For many people digital currency is very difficult understand and appreciate as anything more than another asset going through a speculative bubble. It you held $1000 of bitcoin in 2016 it would be worth $58,000 today. This is also a currency which is so volatile that it can rise or fall by 20% in a very short space of time. But if a system of digital currency offers individuals and businesses in developing countries a way around the trading challenges they face and allows them to flourish it could be a significant monetary factor in facilitating economic development.

Discuss with your class what they know about digital currencies.

What are the advantages and disadvantages for consumers, producers, and governments of digital currency?

Could the use digital currency really facilitate economic development?

Unit 3.5 Government management of the economy – monetary policy 

Unit 4.5 Exchange rates