Recently, inflation has maintained its pace, affecting global economies. Nigeria, itself, is not an exception.
Nigeria, just like other countries, failed to fully recover from the impact of Covid-19. With stringent measures being taken to sustain the value of the Naira, inflation is at recorded levels. Companies such as Jumia Foods, Sanofi, and GlaxoSmithKline have pulled their investments out of Nigeria.
These economic challenges impact every Nigerian household, leading to a constant panic, search for financial security, and assurance that the purchasing power of their Nairas does not fall below expectations.
However, cryptocurrencies such as Tether USD (USDT) are a major solution to protecting your Naira from inflation. But what is USDT and how effective can it be?
USDT, also called Tether, is one among many existing cryptocurrencies formulated to offer stability in price points. Such essence earns it the title of a stablecoin. Stablecoins have their values backed by an equal ratio to fiat which is mostly the United States dollar. It simply means that an individual can convert his 2 USDT holdings to 2 US dollars.
Inflation in Nigeria stems from the volatility of the Naira to other country’s Fiat in the foreign exchange market. It causes the Naira to lose value as its purchasing power over goods and services begins to plummet.
In an attempt to save their Naira from losing as much value as it would in its original state, many choose to save in a more stable Fiat like the United States dollar.
As earlier stated, USDT is pegged or backed by the value of this US currency, making it one of the most suitable options for Nigerians to save their unstable Naira in a less volatile form. They are at liberty to trade this Tether token to retrieve their Naira which will be given at the existing dollar rate.
Aside from the obvious relief of maintaining the value of your Naira, there are other benefits to expect when you save your Nigerian currency in USDT.
investing your monies in USDT can liberate you from some of the setbacks associated with dealing with traditional banks like the extra cost attached to performing transactions. Also, you are bound to experience a better speed in performing international transactions, like sending funds abroad, as compared to utilizing Nigerian financial institutions.
There are many other cryptocurrency options to invest your Nairas but the USDT stablecoin appears to be one safe bet as it is less volatile. What this implies is that their value does not change significantly over time, hence, much gains would not be expected from them, opening up risks for losses if the local currency happens to gain more value subsequently.
On the bright side, the Naira does not strike as one that is ready to regain its value over other currencies like the dollar soon. For that reason, it is safer to stick with the assurance of maintaining an almost exact money value in the long run.
