Nigeria Central Bank Set To Launch Digital Naira Currency (eNaira)

The Nigeria Apex bank - the Central Bank of Nigeria (CBN) has announced plans to launch a digital currency called eNaira or Central Bank Digital Currency (CBDC) by October 1, 2021. The digital currency will be operated on the Hyperledger Fabric Blockchain which is an open source project that serves as a foundation for developing blockchain-based products, solutions and applications. It uses plug-and-play components that are aimed for use within private enterprises.

Is CBDC similar to popular Cyrptos Such as Bitcoin?

The answer is no, they are different in many ways:

CBN can approve or override CBDC transactions since it is in control of the infrastructure, it a direct liability of the central bank and serves as the issuing authority. In contrast, crypto is private money with no central authority.

The CBDC will be backed by law to become a legal tender, whereas the cryptos are not legal tender.

Unlike cryptos that operate via blockchain networks in a decentralized way, a CBDC is a state-issued and controlled digital asset.

How Can the CBDC Be Used?

The CBN document explained that the eNaira CBDC would be distributed to financial institutions and licensed service providers who will in turn make them available to individuals and businesses.

Transactions with CBDCs can either be online or offline. Individuals and businesses will be able to transfer value in real-time via existing and future payment channels (e.g. mobile). The CBD will continue to monitor and maintain CBDC.

Will the eNaira Grow in Value like Bitcoin?

The eNaira will not grow like the Bitcoin and other cryptocurrencies, the reason is because the value will be pegged to the value of the Naira notes so the value remains some. It will function same way the Naira does, it is only a digital version of the Naira notes.

Will the eNaira be connected with existing bank accounts?

No, the eNaira will be created independently of bank accounts, the wallets will be created by financial institutions that will create customer identification through an application product interface (API).

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