Challenges (Risks) Associated with Cryptocurrency

1. Lack of Central Authority: - One of the main feature of crypto currency is that it lacks central government/authority. Although the transaction and account details of each participant is made

public for all the members to see and monitor, there is no particular administrator who is in

charge of monitoring the fluctuations in crypto currency’s activities. This made it difficult to

trace or identify or hold anybody liable for any issue that may call for investigative purpose

(Meiklejohn et al 2016). as such the use of such currency is termed illegal in a country where

there is lack of a central authority.

2. Lack of Anonymity: - this is also another challenge; it is an in built feature of any crypto

currency. The various participants in the transaction do not know each other. This may give

room for shading and illegal activities that they may ordinarily would not engage physically.

3. Lead to cybercrime: - The anonymity and lack of central authority nature of the crypto-

currency may lead some participants into committing cybercrime such as money laundering,

terrorism, trade of illegal goods (drugs weapons, human organs) e.t.c.

4. Lack of Trust: - Nigerians do not trust each other and with past experience associated with

some ponzi scheme ( e.g. MMM), it would discourages many investors. Also because it is still

relatively new, many Nigerians are relatively reluctant in investing in the crypto currency.

5. Subject to hacker’s activities: - Crypto-currency transactions can only be carried out with the

aid of internet facilities which makes it vulnerable to hackers. Unlike in the banking sector

where activities are being monitored by a central authority it is not easy to have access to

another person’s account but under crypto-currency the identity of the rightful owner of an

account can be secretly hacked by manipulating the crypto private key because the crypto-

currency technology cannot differentiate the rightful owners and hackers. Lansky (2018)

stipulate that even the court cannot reverse any hacked executed transaction.

6. Different meaning attributed by different countries: - All over the world, various countries

attached different meaning to crypto-currency based on their evaluation and perception of the

features. Some countries refer to it as real assets, intangible assets, convertible virtual money

etc. For instance, according to Beck & Garratt (2017), Israel and Norway refer to crypto-

currency as a taxable asset, United Arab sees it as virtual commodity, European central bank

in 2012 referred to it as virtual money. In America, between 2013 and 2018 different meanings

were given to it, in 2013 the US treasury calls it virtual money, in 2015 the commodity futures

trading commission calls it commodity while in 2018 the supreme court calls it a fund. All

these different names and meaning makes it complicated for any government to give it legal

backing for usage.

7. Lack of infrastructure such as electricity: This is a big problem in Nigeria where the citizens

cannot boost of power supply regularly. This would definitely affect the investors transactions.