With the rise in popularity of cryptocurrencies, governments around the world have started to produce their own currencies with Bitcoin in the lead, which has changed the landscape of financial payments.
Nigeria is no exception to this new revolution. The Government has decided to launch its own crypto currency known as “eNaira” which is a CBDC (Central Bank Digital Currency) that has its value tied to the Nigerian naira.
CBN had been researching CBDC’s since 2017, and despite giving a cold shoulder to cryptocurrencies earlier this year, has doubled down on its implementation.
What is eNaira?
eNaira is the Nigerian central bank digital currency that will be launched on October 1, 2021. It will function the same way the naira does. Nigeria has selected Bitt Inc. as the technical partner in its launch of the currency and according to the Central Bank of Nigeria, the project’s objectives is to induce financial inclusion, payments efficiency, revenue and tax collection, monetary policy effectiveness amongst others.
Is eNaira the Same as Bitcoin?
No, unlike bitcoin which is a cryptocurrency, the eNaira is a digital currency issued by the Federal Government. It will maintain its stability. Its value will not rise and fall the way Bitcoin does, also meaning it is not for investing to grow your fortunes. The eNaira is simply made to easier facilitate transactions digitally without needing to backed by cash.
How Will The eNaira Work?
The eNaira will work as a digital version of the physical naira. Financial institutions licensed by the CBN will be responsible for ID verification, eNaira payment processing, and creating wallets for customers to hold their eNaira. The wallet is similar to a bank account and is created the same way but will be a separate account not connected to an already existing bank account.
Is The eNaira Safe?
The eNaira is designed to solve verification risks by assuring holders of the currency that is it a valid token. This authenticity is achieved by the eNaira being built on a blockchain. Creating the eNaira on a blockchain means you cannot have a duplicate or fake eNaira. Each eNaira note will be unique.
How Can I Acquire and Use the eNaira?
After the central bank launches this currency, it will be distributed to financial institutions and licensed service providers who will in turn make them available to individuals and businesses. Transactions with CBDS’s can either be offline or online as individuals will be able to use existing and future payment channels to transfer value.
Why Do I have to Use it?
The apex bank is driving on inclusion. The eNaira has a low cost advantage compared to FIAT. It will allow the vast majority who do not hold a bank account but have a phone to be involved in the financial economy. The daily transfers between the eNaira accounts will be at no cost to the account holders. No transaction fees reduce the cost of ecommerce while improving safety.
How Will The eNaira Affect the Economy?
It is still unclear the impact the eNaira will have on the Nigerian economy, but the CBN believes that it will greatly promote formal cross-border payments for efficiency, convenience and affordability. It is believed that it will create an opportunity to unlock new revenue and growth opportunities which will have a positive impact on the economy.
You can leave your thoughts in the comment section below. Let us know if the eNaira is a Yay or Nay for you.