eNaira Crypto Wallet Review and CBN Updates
Nigeria’s central bank, the CBN, has been mulling the launch of the eNaira cryptocurrency. However, there are still many questions about the need for eNaira crypto and the technical partner the Central Bank of Nigeria chose for the project.
While CBN officials are sceptical, Bitt Inc., a small Barbados-based company, was chosen after a rigorous selection process that evaluated ten companies. To help the CBN determine whether the eNaira will be successful, the Central Bank of Nigeria has provided a technical partner for the project.
Objectives of eNaira Crypto
In driving this core objective, the eNaira crypto will deliver on key economic objectives of the Central Bank of Nigeria highlighted below which will impact overall economic growth and generate significant social and economic benefits for all Nigerians.
- Empowerment and poverty reduction
- Growth in cross-border trade
- Financial inclusion
- Improved Forex’s position in the country
- Improved monetary and financial stability policies
eNaira is a digital currency
eNaira is a digital cryptocurrency that is backed by the Naira, the country’s primary currency. It is an electronic medium of exchange and transactions in eNaira will be made through e-wallets. Because it will have the same value as the Naira, eNaira can be used to make payments from one country to another.
In addition, all transactions in eNaira will not appear on a person’s bank statement. The eNaira crypto is an open, transparent, and secures digital currency. The currency uses advanced cryptographic techniques to make transactions secure.
eNaira crypto also utilizes a tiered KYC structure. eNaira places high value on data protection, and you, as the user, can determine how your information is used. It is possible to view all of your eNaira transactions in the eNaira wallet, as well as see the history of payments and balances.
In Nigeria, the CBN selected Hyperledger Fabric Blockchain to run eNaira. The blockchain is Permissioned, meaning the government will grant access to all parties and maintain control of the system. The financial institutions will play a key role in the eNaira implementation, such as
- Identity Verification
- Payment processing
- eNaira wallets
In December 2021, the eNaira consumer wallet saw 583,000 downloads. The merchant wallet received 83,000 downloads. This digital currency is now available in 160 countries.
eNaira crypto is pegged to the Nigerian Naira
The eNaira is a digital currency that is backed by the Nigerian central bank. Unlike Bitcoin, it will not be a replacement for the physical Naira. It will simply act as a digital representation of the physical currency. The central bank is launching a pilot scheme for the eNaira in October 2021.
The currency is currently unregulated, but that will soon change. The eNaira crypto will be linked to the Naira so that its value remains stable. A stablecoin is one backed by a reverse asset or foreign currency. Since the eNaira will be backed by the Naira, it will have the same value as the real Naira.
Fintech and banks will play a huge role in the development of eNaira. The eNaira will be tied to the Nigerian Naira and integrated into the CBN’s forex system. It will allow for cheaper remittances. Users will be able to credit eNaira into their accounts at the International Money Transfer Organisation (IMTO), which will then buy the eNaira from banks in Nigeria.
If you send $100 to Nigeria, the exchange will immediately convert it to eNaira, and the price of the transfer is much lower than the traditional method. The eNaira will be backed by the Nigerian Naira and will provide a way for Nigerians to send and receive money without the need for third-party intermediaries.
It is hoped that Nigeria’s government will ban offshore crypto platforms, which have helped the currency survive. If it is banned, it would be disastrous for the Nigerian economy. In the long run, however, the eNaira could be a big boost to the financial system.
eNaira Crypto is a fiat currency
What’s the difference between the eNaira crypto and the Nigerian Naira? While the eNaira will have the same value as the real thing, its volatility is unlikely to be as high as the Naira. However, the eNaira’s value will be backed by the Naira, unlike Bitcoin and Ethereum, backed only by reverse assets.
Since the CBN has been suspicious of cryptocurrencies since their inception, banks are not allowed to participate in financial transactions involving cryptocurrencies. While this has hindered Nigerians from utilizing the eNaira, it has prompted many Nigerians to place their savings in this alternative currency as a hedge against the depreciation of the Naira.
But the proposed eNaira cryptocurrency is still a far cry from becoming a reality. While cryptocurrency is unregulated, central bank digital currencies are backed by a central bank and pegged to the nation’s monetary reserves.
This means that the eNaira will be a stable, regulated alternative to cash and fiat currencies. For this reason, the Central Bank of Nigeria has banned the use of cryptocurrencies in Nigeria. The Nigerian government recently launched the eNaira, a digital currency with the same value as the fiat Naira.
It is also a digital currency that is issued by the government and transferable to a customer’s e-wallet. It is similar to the Chinese renminbi and the Swedish e-krona, but it’s more stable and less volatile. It will eventually be the same value as the country’s official currency.
Distributed through commercial banks
The central bank of Nigeria has opted for a phased approach to roll out CBDC in Nigeria. It has launched eNaira as Phase I of the rollout, while later phases are expected to be released by 2022. But the timing of these developments remains unclear.
However, it is safe to assume that the Nigerian government intends to distribute eNaira crypto through commercial banks. The technology behind the eNaira cryptocurrency is based on the distributed ledger, which is the base of blockchain technology.
It has the same value as the physical Naira, so its value will rise and fall like the Naira, although it is not likely to be as volatile as other cryptocurrencies due to its lack of government backing. The CBN has been suspicious of cryptocurrencies from the start and has restricted banks from engaging in financial transactions involving them.
But despite the heightened regulatory environment surrounding cryptocurrencies, Nigerians have placed their savings in cryptocurrencies as a hedge against the depreciating Naira. The introduction of eNaira will reduce the cost of cash processing and increase financial inclusion. It would also enable direct welfare interventions to citizens, improve tax collection, and increase revenue.
In addition, it would facilitate payments and remittances from abroad. While it is still unknown whether eNaira will be distributed through commercial banks, the technology will make the process of distributing eNaira crypto more straightforward and more accessible than ever.
It will boost financial inclusion
The Central Bank of Nigeria is testing the eNaira digital currency, or CBDC, on a pilot basis. While it will not replace the physical naira, it will act as a virtual representation. The trial scheme will begin on October 1, 2021. The Central Bank of Nigeria has not stated whether the pilot will be available to the general public or only to those within the country’s borders.
The CBN owns the platform and infrastructure and the data of its users. This move could turn the regulator into a competitor, as well. In addition, free transactions will divert traffic away from the payment services of Fintechs and banks, which could impact their long-term viability.
The government-issued wallet has four tiers – Tier 0 requires a name and photo. Tier 1 requires a national identity number and address. However, eNaira makes the process simpler for those not already bank-connected.
The Nigerian government is working with Bitt Inc, a cryptocurrency company, to launch eNaira in the country. The eNaira will serve as a digital wallet and facilitate cheaper remittance inflows. The CBN and Bitt Inc are working together to launch eNaira in Nigeria. This partnership could prove a game-changer for the country’s economy and banking system.
It could disrupt existing banking systems
The emergence of the eNaira cryptocurrency in Nigeria could drastically change the financial landscape of the country and force legacy banks to expand their services.
Bitt Inc, a technology company partnered with the Central Bank of Nigeria, believes that digital currency will help transform the banking infrastructure by facilitating faster interactions. It also claims to be secure. The firm’s research on the subject is published in Tech54. Although the eNaira crypto is still in its infancy, it has already been a success in the Bahamas.
However, the risks that come with eNaira crypto are many. There is a significant risk of cyber security breaches, which could result in compromised security and operations. Furthermore, eNaira wallets could be perceived as central bank deposits, thereby decreasing the demand for commercial bank deposits.
Ultimately, the cryptocurrency’s use and adoption could have significant repercussions on Nigeria’s economy and banking system. While Nigeria is leading the way, many other developing countries are also looking into this technology.
Ghana and South Africa are close to a trial of the eNaira system, while Kenya and Madagascar are still in the research stages. The pandemic has also forced the closure of many bank branches throughout the country. The few that are still open are located primarily in urban centres, and this excludes many Nigerians without bank accounts.
254 total views, 1 views today
- Watch Video “The Black Phone,” A Serial Killer Movie - 03/07/2022
- Information Security Analysts Entry Level Jobs - 03/07/2022
- 8 Computer Technology Jobs that Don’t Require a Degree - 03/07/2022