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The Political Economy of Cryptocurrency

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M A Iliasu

 

 

-By Muhammad Ahmad Iliasu.

 

One would have to wonder how huge the work rate of economic theory must be to astonishingly liberate existential debates on the possibility or otherwise, the undertones and the future of currency digitalization – which has been the major talking phenomenon since the slump in 2008. Nevertheless, a free flow of theoretical opinions and treatise prescriptions by established economists, prophecies of doom and suggestions in persuasion by ecosystem commentators is only expected when the phenomenon is a determining factor on the future of money and the role of government.

 

Cryptocurrency as the so-called apolitical and decentralized digital currency is an economic phenomenon like any other, unlike what many people think, and therefore has a meaningful context inside the economic theory. On its own merits, its warranted to say that the economic relevance of the phenomenon takes the courtesy of massaging the idea of the monetary economists who hold immense reservations upon the centralization of money supply and government intervention in general, along the line rattling the scrutiny of the neo-Keynesian economists and their sensitivity to the centralization of money supply and government intervention generally.

 

Predicting the major stand of the two distinguished schools would economically speaking, be as easier as tracing the economic backgrounds of their distinctive arguments. The neo-Keynesians would naturally be anti-cryptocurrency for the threat it cast upon centralization and the policing of financial bubbles. While the monetarists would be more inclined to be pro-cryptocurrency for the opportunity it brings their thoughts on fixation and decentralization. Why they hold their stands should be discussed later in the essay.

 

-What is a cryptocurrency and why has it been introduced?

 

The 2008 global financial crisis was a moment in history during which bankers’ hubris blew out spectacularly. The big number of jobs, businesses, houses and assets lost to crisis crushed people’s optimism to the level where the trust between economic society and bankers alongside their politicians allies arrived under radical scrutiny. People felt the impact of the crisis and therefore no longer trust the engineers that created it – the bankers and the politicians. As a response, the Central Bank governors of the G-20 organized a meeting to discuss how the bankers were to be rescued from the financial disaster. The concerned populace who understood how banking hubris works and what the bailout could turn out to be, began to exercise the hope and thoughts of having a medium of exchange (read: currency or money), that get affected neither by the hubris of bankers nor by the skeptical government intervention. An apolitical money that can’t be controlled by the central, and democratically decentralized in a nature that it’ll be a currency of the people, for the people and by the people.

 

In an attempt to satisfy people’s wish for apolitical currency, an email was received bearing the signature of Satoshi Nakamoto (who is still yet to be to identified) carrying an algorithm that meets people’s ideals, what we currently call “Bitcoin”. The beauty of Nakamoto’s algorithm was that it did away with the ledger run by a central authority but still managed to ensure that a single currency unit could never be copied or spent twice. The whole community using Bitcoin would share in the task by each making available a small part of their computer’s capacity for this purpose. Everyone would observe everyone else’s transactions, ensuring their validity, while at the same time no one would know whose transactions they were observing, safeguarding privacy. Many people around the world were enthused and signed up. Until a large scandal perpetrated by entrepreneurs who exploited people’s fears against fraud to collect their quantity of Bitcoin for safeguarding only for them to run away with it. And with the absence of a centralized controller, people lost their money without insurance or bailout.

 

That was the inception of cryptocurrency and the reason behind its introduction. But as any logical thinker could guess, the nature of the currency and the reasons behind it are all pending the complexities of an ecosystem that doesn’t get easily overrun by the wildness of popular fantasies. Some of those complexities were explained inside the economic theory, experienced in the past, and are the skeletal frameworks forming the arguments of the monetarists and Neo-Keynesians.

 

-Crisis and Logic of History.

 

When the hell of economic crisis broke loose in Europe and America back in 1929, a policy prescription that aimed at controlling inflation was introduced which convinced the US and the European economies to print only the quantity supply of money that corresponds to the same amount of gold reserve, the so-called “Gold Standard”. Through Gold Standard, economies were cuffed to hinder the reckless printing of money – which was the determining factor in the surge of inflation. For if countries are obliged to print money with respect to gold reserve – something with limited, though intrinsic supply – the velocity of money in circulation would be reasonable and the money supply is tied to a commodity that doesn’t get assassinated by inflation. That way, the countries found a standard and common dictator of their currency value, just like the dollar nowadays. But a few years later, the demand for money began to exceed the supply, due to the limited supply of money as a result of printing per unit of gold. And shortly afterward, the story changed. Inflation – an occurrence when the quantity of money in the economy chases the same quantity of a commodity, causing the prices to unhealthily rise – culminated into what the economists call “Deflation” – an occurrence when too less quantity of money chases significantly higher quantity of commodities, causing a significant a fall in the price of goods and services below their actual and reasonable value.

 

The deflation in the US forced the hands of the then government under President Roosevelt, and the European economies, the emissary of which was the famous John Maynard Keynes, to abolish the “Gold Standard”. It was later adopted and abolished once again by President Nixon in the 70s. The underlying rationale behind the consistent execution and abolishing of the policy during the 20th century was informed by the standard economic theory that asserts and has been proven accurate that when money supply is fixed below the rate of public demand, deflation will strike. In the same way, when it is left uncontrolled beyond the public demand, inflation will strike.

 

Along the same curve, the decentralized nature of Cryptocurrency means it can’t be policed by any institution, rather a blockchain that comprises of different unidentified individuals with an asymmetric chance of arriving at a consensus. And when Satoshi Nakamoto (who is yet to be known) explained his algorithm in 2009, it was specified that the total supply of Bitcoin was certainly fixed, with the mining only certain to grow slowly until it reaches a maximum number of 1 million Bitcoins sometime in 2032. That means the digital currency is problematic in two ways; first it makes crisis more likely and secondly it offers no room for government to alleviate the crisis. So the prospects of any economy that gets into bed with cryptocurrency resemble the pre-1929 unpoliced economy that was crushed by absurd inflation. The same way its limited supply renders the prospects of any economy that adopts it to face the threat of post-1929 economy that was plagued by Gold Standard deflation. So in short, with cryptocurrency, it’s either deflation or inflation, with price and currency stability extremely unlikely.

 

That was the viewpoint of the Neo-Keynesian economists, mostly the alumni of Harvard. The most vocal being the American economist and crisis expert, Professor Roubiel Roubini from the University of New York, who even believes that cryptocurrency has no feature of money. And the Greek economist and author, Professor Yanis Varoufakis from the University of Athens. The latter dedicated a whole chapter to discussing the issue extensively in the prolific crisis-dissecting book, “The Brief History of Capitalism”. While the former is quite consistent with podcasts and interviews.

 

-Modern Sensitivity to Technology and impact of Optimism.

 

In contrast to the belief of the Neo-Keynesians, the most influential figure in the monetary school, Milton Friedman, originally proposed a fixed monetary rule, called Friedman’s k-percent rule, where the money supply would be automatically increased by a fixed percentage per year. Under this rule, there would be no leeway for the central reserve bank, as money supply increases could be determined “by a computer”, and business could anticipate all money supply changes. With other monetarists, he believed that the active manipulation of the money supply or its growth rate is more likely to destabilize than stabilize the economy. So the most important area of concentration is price stability rather than currency stability as proposed by Keynes.

 

The mention of computers by Friedman, and the fixed increase rate of money per year, agrees with two of the three most important features of cryptocurrency, which are digitalization and the fixed increase rate of Bitcoin until 2032. While the consistent castigating of the Central Bank by Friedman and Schwartz skews their idea closer to decentralization than otherwise.

 

The monetarists who are mostly anti-Keynes and subtly pro-decentralization arrived fierce to debunk what they call nostalgia that was inspired by an obsession with post-crisis literature, mostly the contributions of Keynes that comprises of “The General Theory of Employment, Interest, and Money (1932)” and “A Treatise on Money 1930”. The mainstream among their economic commentators debunks the thesis in some of the post-2008 contributions of Yanis Varoufakis that discussed the economy and future of capitalism. Books like “The Brief History of Capitalism (2014)”, “Adults In the Room: My Battle with Europe’s Deep Establishment (2017), “And The Weak Suffer What They Must: Europe, Austerity and the Threat to Global Stability (2016)”.

 

-Music and Musing; where do I stand?

 

Having observed the possible major stands of the two distinctive schools, the argument of pro-Keynes that revolves around the fixated supply of cryptocurrency was debunked once again by the creation of other types of cryptocurrencies like Ethereum and Dodge, which unlike Bitcoin are of unlimited supply. So one of the two problems of digital currency is said to be eliminated. Meanwhile, while decentralization remains a concern for any individual household that understands the importance and need for government intervention, major technologically-innovative countries like China and Japan are already paving the way for decentralization of their financial institutions to accommodate the cryptocurrency. And the decision is being backed by lucrative optimism from the buyers of Bitcoin and other forms of cryptocurrency, which is driving its value crazily higher than expected. For what that’s worth, it’s certain that cryptocurrency is surging for a reason, the same way it could be said it’s here for a reason. To quixotic commentators, it’s more like the introduction of the computer in the ’80s, so it’ll be correct if termed inevitable. Therefore judging from the flow, perhaps in the grand scheme of things the digital currency would have to be accommodated if it continues to dominate the economy. The question is when?

 

The rhetoric also begs the question; maybe the economists that are using Keynes to reject crypto are indeed plagued by nostalgia and fear that was bred due to consumption of post-crisis literature judging from the way cryptocurrency has been gathering incredible optimism and momentum. The reception it receives from rational and visionary capitalists like Elon Musk suggests so. But equally important are the questions: what would be the future of government without its ability to regulate money supply? What would be the response of America to a phenomenon that could dwarf the demand for the dollar and the democratic nature of which could swindle the dollarization policy? What would be the second reaction of Third World countries whose democracies are so young and fragile, economies too unstable and inconsistent as to give-in to decentralization? What solution is there for the possible reoccurrence of the 2008 e-Theft?

Privatization of Public Spaces: A Tragedy for Land Use Planning in Kano Metropolis

Currently, not enough has been said or shown to indicate the wavering of governmental institutions as to give up their power on the money supply. Chinese and Japanese economies are too advanced to be the sample of inference while judging possible decentralization in countries like Nigeria that has been fighting its second recession in a half-decade, accumulating large chunk of debt and abject recession for almost a decade despite surprisingly being one of the highest traders of the cryptocurrency. It’s no wonder that the CBN banned it outrightly. First for being ignorant of its dynamics as was learned from the governor. And second for having neither the efficient economic environment nor the institutional strength to accommodate it. Likewise, where the accommodation of decentralization is concerned, banking sectors will have to restructure for the death of their last resort – the Central Bank. And when all the transactions are fiat, an existential crisis looms in the employment department of the banking sector.

 

There’s also the case of cryptocurrency as a simultaneous medium of exchange and investment. When it becomes dominant the economic society may fall victim to the fallacy of composition and paradox of thrift, because more people would rather save their money in crypto to enjoy its speedy appreciation in value than do otherwise. And that would put the multiplier effect of disposable income and immediate consumption in jeopardy. The circular flow of income may turn into a vicious circle of rational economic households looking to outsmart themselves for profit but are subconsciously crushing the entire ecosystem. The digital running of the currency as an investment medium will remain the major avenue of investment, and little do we forget that it’s greatly influenced by speculation. And like Keynes said in the prophetic “General Theory: “Speculators may do no harm as bubbles on a steady stream of enterprise. But the position is serious when an enterprise becomes a bubble on a whirlpool of speculation. When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill done.”

 

The Keynesian prophets of doom should do kindly as to exercise patience. In the same way, the monetarists should enjoy their giant leap forward towards decentralization. Who is right shall be vindicated by time. If it’s the Keynesians the status quo lives on. And if it’s the monetarists we can look back to 2008 and say the crisis is indeed the laboratory of the future. But personally, I don’t think money can ever be apolitical, governments are as old and their influence as lasting as the social contract itself. In the same way, I believe in the strength of optimism, which is driving all the possibilities of cryptocurrency. After all, as Keynes said: “Investment is dedicating our intelligence in predicting what average opinion expects the average opinion to be”. If the blockchain behind Nakamoto’s algorithm keeps getting the mind of the global economy spot on, Cryptocurrency are more than capable of being here to stay. But where an error occurs all hell would break loose. Whatever happens, we shall live to witness.

 

MA Iliasu studies economics at Bayero University, Kano.

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Opinion

Gov. Yusuf’s executive order extending retirement age for HoS, Kano Assembly Clerk, and others unconstitutional

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Sani Usman-DanAbdullo, a Director of Admin and General Services at the Kano State Agency for the Control of Aids, KSACA, has written to the state assembly, seeking its intervention in the
Executive Order issued by Governor Abba Yusuf.

Mr DanAbdullo, in a petition dated January 6 and addressed to Speaker of the Assembly, Jibrin Ismail Falgore, recalled that the governor had in January 2025 issued Executive Order No. 1 of 2025, extending the service period of some civil servants.

According to him, the governor extended the service year of the Head of Service, Assembly Clerk, some judicial officers, Permanent Secretaries and a host of other staff in the state health sector for 2 years after they were due for retirement as of December 2024.

The lawyer also recalled that the state assembly had enacted a law fixing the retirement of staff at 60 years of age or 35 years of service, depending on whichever comes first.

Mr DanAbdullo, therefore, asserted that the governor’s executive order was unconstitutional, “since the House has already made laws which the order seeks to alter”.

He noted that that executive order is not meant to alter, amend, modify or expand the law made by the legislature.

“This act, is, therefore, a clear violation of the principles of rule of law and separation of powers enshrined in our Constitution being not only a clear attempt to usurp the legislative powers of this Honourable House, but to contradict the existing laws already enacted by it in exercise of its powers as such,” the petition added.

While dismissing a claim that the governor issued the order in the spirit of the Doctrine of Necessity, Mr DanAbdullo said there was no justification for extending the service years of the affected retired officers since there are many competent hands with adequate qualifications to be appointed.

“And as for the staff in the health sector, they can be retained on contract arrangement in line with the existing service law of Kano State,” the petition added.

Mr DanAbdullo, therefore, warned that the provisions of the Constitution must not be subordinated to any other law, and must not be subjected to the indignity of deletion of any section or part thereof.

“In view of the foregoing, I urge this esteemed House to employ all legal mechanism at its disposal to overrule the Governor’s decision in the act complained of, which is capable of setting a very dangerous precedent that will ruin the entire public service system of our dear State, if allowed.

“TAKE NOTICE Sir, this act of indiscriminate issuance of executive order, if allowed, will cause the entire Kano State the following catastrophic effects,”

The State Assembly failed to attend to the petition even if it means dismissing it for fear of the governor, if the petition is not attended to we will have no option but to go to court”. He added

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Opinion

The Movement (Tafiyar Matasa) and the Very Big Questions to Answer

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Comr. Habu Hassan Abdullahi

Comr. Habu Hassan Abdullahi

Yes, I am not some sort of social critic who would unfairly denigrate someone’s achievement for personal gain or political interest that I do not have. Thus, this is pre-eminently the right time to speak the truth to the members of my generation in Nigeria whether they care to accept it or not. But remember the truth is always truth and can stand alone.

No doubt that not everyone is happy with how leadership is running in this country, with the exception of those at the corridor of power. But this is not enough to be a raison d’etre to handle our dear nation to the hands of inexperienced youths. Forgive my pen for the use of “inexperienced”. Just because most of them have never been to real leadership. Of course, I am myself opposed to the exclusionary habit of the present politicians, they’ve relegated youths to the mantle of power but we have to cautiously control our faculty of thinking to avoid getting entangled in a lust for power.

I was very happy when I heard the idea of “The Movement” known as “Tafiyar Matasa” in the Hausa language. And of course, the genesis of the movement was attributed to the unavoidable “EndBadGovernance” protest of 1st August, 2024. The movement began immediately after the protest, in fact, it is one of the noticeable outcomes of the protest due to the unity it brought. The idea of the movement was preached and promoted by some prominent northern activists and social media influencers to serve as a last resort to the youths in their effort to bring good governance. No one can deny the fact this is a laudable effort. But the very big question supposed to be asked here is: youthfulness is the only parameter and yardstick to measure the caliber of a good leader? If yes, why Yahaya Bello (Former Governor of Kogi) and Abdurrasheeed Bawa (former EFCC Boss) were arraigned for looting the public treasury! The point I want to make here is, being young or old will not be a determining factor for an individual to be a good leader. We can have corrupt leaders within any range of age.

Another important issue to take into cognizance is the failure of some youths to comprehend the logic and existing distinction between being a good activist and being a good leader. Leadership is quite different from activism, therefore, a good activist may not necessarily be a good leader. It is common knowledge that the conveners of this important movement lack practical leadership acumen and organizational skills that are fundamental for successful leadership. Okay, should we handle our future to the trial and error leaders? We have to exercise extraordinary care when it comes to leadership.

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Yet another problem faced by this movement is financial constraints. To be sincere and frank, the quantum resources required to run a great national political movement like this oversizes the pockets of the conveners. Another organic question to ask here is: where the movement conveners can solicit humongous financial resources? From the politicians they are castigating? If yes, this is performative contradiction!

Finally, I would like to remind my fellow youths that new breed, as the late Yusuf Maitama said, cannot solve the Nigerian problem. There must be mutual cooperation and understanding between the new breed and old breed. We must work together with them to acquire all necessary experience, knowledge, and practical leadership skills.

Written by
Comr. Habu Hassan Abdullahi
From Bayero University, Kano
Department of Education
Contact via 07065941454 or habu92hassan@gmail.com

 

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Opinion

Time to Move on at the University of Abuja

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By Alabi Lut

In the past four months, the University of Abuja has been in the news over the appointment of a substantive vice-chancellor. Controversies and disagreements surrounding such appointments are not necessarily unexpected, particularly in a university situated in the Federal Capital Territory, near the seat of power. What is unusual and unnecessary, however, is that those who feel aggrieved that they or their preferred candidates were not appointed have refused to wake up to the reality of Professor Aisha Sani Maikudi’s leadership. Instead of accepting the decision, they have continued their attacks on the University and the person of the Vice-Chancellor.
Despite these persistent attacks, Professor Maikudi has continued to receive accolades and congratulatory messages from both within and outside the University community. The University Senate, which comprises Deans, Academic Directors, Heads of Departments, and Professors, has congratulated her as well and thrown its weight behind her leadership by passing a vote of confidence in the Chairman of the Governing Council, Air Vice Marshal Saddiq Ismaila Kaita. This should send a strong message to the small clique of dissenters that she is well accepted.
What is even more significant is that the management of the University and the Vice-Chancellor herself have refused to be distracted by this orchestrated smear campaign. Instead, the vice chancellor has remained focused on academic and administrative activities to ensure the growth and development of the institution.

One of the major events on the University’s calendar is the upcoming matriculation ceremony. Following a commendable admission exercise, thousands of newly admitted students are set to be officially welcomed into the university this week. For these students and their parents, guardians, this ceremony will be quite memorable to them.
Also, the University has already scheduled its 29th convocation ceremony for this month. It will be a momentous occasion for students who have successfully completed their academic programmes and are now set to graduate.

Since assuming office, Professor Maikudi has met with virtually all key stakeholders to give them a sense of belonging. She appreciates the importance of bringing the University community together to actualise her vision and move the University forward. Her appointment continues to resonate with the whole world. No wonder that on Friday 31st December 2025, when she turned 42, she was celebrated as that leader who means a lot to the University community. At the occasion which attracted great personalities, including the governor of her home state, Katsina, Dikko Umar Radda; Governor Uba Sani of Kaduna State, and former governor and speaker of the House of Representatives, Aminu Bello Masari, and other prominent personalities, one guest noted jocularly, “Maikudi shouldn’t be celebrated just because she’s now Vice-Chancellor or because she’s hit the big 4-2. She should be celebrated because she’s got the brains to take the university to greater heights—and let’s be honest she is beautiful too!”
Managing a tertiary institution, especially a big one like the University of Abuja, is no small task. Established in 1988, the University has come a long way, still it has much ground to cover in terms of infrastructure and academic development.
While past leaders played their own part, there is no doubt that more work needs to be done. I think the University community understands this as well as the vice-chancellor.
At a recent town hall meeting with student leaders, Maikudi was met with both congratulatory messages and pressing demands. The students, while pledging their support, shared their various expectations, which included need for increased hostel accommodation and transportation. Indeed, the current demand for hostels far exceeds available space, and many have had to seek alternatives. However, her promise to expand accommodation facilities through public-private partnerships has given a lot of hope to both students and staff.
The need to revise the university’s academic calendar is another crucial task. Disruptions caused by previous Academic Staff Union of Universities (ASUU) strikes and the COVID-19 pandemic have left the institution struggling to maintain a stable academic schedule. Thankfully, the University Senate took a welcomed decision for a structured, well-maintained calendar that will help the smooth running of academic programmes in the coming years.
One of the biggest challenges that will face the administration of Maikudi will be funding. Like most Nigerian public universities, the University of Abuja operates on a lean budget. The issue of inadequate funding is compounded by other challenges, such as encroachment on the university’s over 11,000 hectares of land.
However, Professor Maikudi is no stranger to leadership. She has steadily risen through the ranks—from being a Head of Department to Deputy Dean of Law, Director of the University’s International Centre, then Deputy Vice-Chancellor, Acting Vice-Chancellor — to become the substantive Vice-Chancellor. Her experience so far means she understands the University’s workings inside out, and this puts her at a vantage position to handle its challenges effectively. As an administrator with impressive networking skills, the issue of funding particularly should be well mitigated.
At this point, those who remain opposed to her appointment should acknowledge her competence and level of preparedness, and accept that it is time to move forward. Sure, leadership comes with its fair share of obstacles, and history has shown that great leaders often face certain resistance before achieving success. Perhaps the opposition she has encountered so far are simply part of the journey meant to fortify her and edge her toward changing the University of Abuja for the better.
One of her key strategies, which has been widely welcomed, is working with a new team of competent individuals who can help her achieve her vision. The recent appointment of Abubakar Sadiq Abba as Deputy Vice-Chancellor (Academic) by the University Senate is praiseworthy. Abba, a professor of political science will hold this position for another two years and will be expected to help the vice chancellor, along with other management members, towards realising the strategic objectives of her administration.
The University of Abuja needs at this moment, a leader like Professor Maikudi to move it beyond the present point. Now is the time to focus on building a stronger, more vibrant University of Abuja. And she deserves every support to actualise this vision.
Those who have resisted her leadership must now recognise the need to collaborate in this important journey. There can be hardly any progress without unity. The University, its students, and the broader academic community stand to benefit far more from such a collaborative approach than from continued division.

 

Alabi Lut writes from No 42B Federal Housing Lugbe, Abuja.

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