With the rise in popularity of cryptocurrencies like Bitcoin, governments around the world have begun to consider producing their own digital currencies.
Digital currency refers to any means of payment that exists in a purely electronic form.
What is Nigeria’s eNaira About?
According to the website, www.enaira.com, it is a Central Bank-issued digital currency that provides a unique form of money denominated in Naira.
It is the digital form of the Naira and will be used just like cash.
The new currency will not replace the physical Naira but will act as a digital representation of it, having the same exchange value as Naira.
The CBN believes it will greatly improve financial inclusion, payment processing, and tax collection, among other things.
How It Works
It is designed to solve verification risks by assuring all holders that each eNaira is a valid token. This authenticity is achieved by building the eNaira on the blockchain. Thus instead of buying phone credits, I will debit my bank account for N100, convert it to eNaira, and transfer it to a friend. My friend can spend the funds directly from her phone or transfer and get cash.
It will also bring in the vast majority of the unbanked Nigerians who have no bank account but have a phone into the formal financial economy.
Is it Safe?
The platform is built on blockchain open ledger technology. Creating the site on the blockchain means you cannot have a duplicate or fake eNaira.
The system uses a two-factor authentication system in addition to cryptographic encryption to ensure the safety of customers’ wallets and the eNaira holding.
eNaira vs Cryptocurrency
Cryptocurrency is private money with no central authority. It is not a legal tender, and it is not a liability of the Central Bank or any of its regulated institutions.
According to Godwin Emefiele, the digital currency launch will not be a one-off thing, but a journey that would start on October 1.
eNaira is a plus to the Nigerian economy, and a positive progression towards a cashless society, with lower costs, and higher productivity.