How Does E-Naira Work

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                     eNaira: All You Need To Know About CBN's Proposed ... - AllNews Nigeria                                       

 This article is written to inform the public about the operations an potential benefits of the much awaited e Naira that would be issued by the central bank of Nigeria come 1st October, 2021. it answers questions such as:

  • Is eNaira a cryptocurrency?
  • Is it going to raise in value like bitcoin and other cryptocurrencies?
  • What type of blockchain protocol is it going to operate on?
  • Can it be traded on a cryptoexchange?
  • How can I purchase the e-Naira?

Since the introduction of the first publicly traded Crypto currency- the Bitcoin in 2009, the has been wide adoption of cryptocurrencies by Nigerians which eventually lead to the ban on crypto transactions by the Nigerian government durring the #EndSars protest and the eventual proposal of a digital national currency called the e-naira.

This e-naira is a cental bank issued digital currency (CBDC). In describing the proposal to lawmakers on the floor of the senate at a senate hearing in February, the  Central Bank of Nigeria (CBN) Governor, Godwin Emefiele, famously described this digital currency as ‘money out of thin air'.

 It revealed on July 22, 2021, that the pilot scheme for the project will begin on 1st October,2021- a day which corresponds to the independence day celebration in the country.

What Is A Central Bank Digital Currency (CBDC)? 

The phrase "central bank digital currency" (CBDC) has been used to refer to various proposals involving digital currency issued by a central bank.   

Central bank digital currencies are also called digital fiat currencies or digital base money.

The present concept of "central bank digital currency" may have been partially inspired by Bitcoin and similar blockchain-based cryptocurrencies.

 It is also a known concept in the field of economics, whereby the central bank enables citizens to hold accounts with it, providing a reliable and safe public savings or payments medium.

This concept  is nothing new as some countries had  in previous years directly released e-money – such as Finland's Avant stored value e-money card in the 1990s and the I LIKE Q, which was launch by Czech republic In 2000, enabling the implementation of so-called micropayments on the Internet.

 

Is e-Naira A Cryptocurrency? 

While CBDC might share similarities with cryptocurrencies that is running on a Blockchain for example they cannot be said to be cryptocurrencies. 

It characteristics differs from those of cryptocurrencies in terms of economics.

The central bank  is not creating a cryptocurrency as some might think, they are only trying to convert the local fiat currency in this case the Naira into a digital form for the purpose of internet transactions

Simply, CBDCs are currencies created digitally to facilitate digital transactions.

The eNaira will function the same way the Naira does. The difference being the former is digital. The eNaira will be pegged to the Naira so their value remains the same so one should'nt expect to make a fortune out of it.

 It will operate like a stable coin and will be prone to inflation but resistant to volatility like bitcoin.


 Is It Going To Raise In Value Like Bitcoin And Other Cryptocurrencies?

 The direct answer is 'No' it wont raise in value like bitcoin and other cryptocurrencies because it is a stable coin which is pegged to a fiat currency. 

                                            EQUIVN | Easy deposits, Smart sends & withdrawals of Naira

As the Naira appreciate or depreciates in value, so would the value of the eNaira.


What Type Of Blockchain Protocol Is It Going To Operate On?

The Hyperledger Fabric Blockchain is the blockchain network commissioned by the central bank for the eNaira to run on.

Hyperledger (or the Hyperledger project) is an umbrella project of open source blockchains and related tools, started in December 2015 by the Linux Foundation, and has received contributions from IBM, Intel and SAP Ariba, to support the collaborative development of blockchain-based distributed ledgers.

The objective of the project is to advance cross-industry collaboration by developing blockchains and distributed ledgers, with a particular focus on improving the performance and reliability of these systems so that they are capable of supporting global business transactions by major technological, financial and supply chain companies

The project will integrate independent open protocols and standards by means of a framework for use-specific modules, including blockchains with their own consensus and storage routines, as well as services for identity, access control and smart contracts.

Financial institutions will also play roles in identity verification, payment processing amongst other things as licensed fintech companies can mint the eNaira and also create wallets for customers  just the same way bank accounts are created.

Bitt incorp. is the primary arbiter  of eNaira. the company is a Financial Technology company that utilizes blockchain and distributed ledger technology to facilitate secure peer-to-peer transactions with seamless mobile money across a suite of Bitt's Software and Mobile Applications.

 

 Can It Be Traded On  Crypto Exchanges?

In as much as trading of cryptocurrencies in Nigeria is under  ban, the issue of whether eNaira would be traded on crypto exchanges is something one can only wish for at this time. 

Perhaps the government may decide to lift the current ban on crypto trading in the country.

 

How Can I Purchase The e-Naira?

Soon the CBN will be rolling out “Speed Wallets” to meet the October 1 deadline while banks and other licensed financial institutions will be charged with creating wallets afterwards.

These Speed Wallets, will be in three tiers. 

Tier 1 (Those without any bank account)

Transfer Limit:  ₦50,000

requirement:

  • National Identity Number (NIN)
  • Passport Photograph
  • Name
  • Date Of Birth
  • Phone Number And Address

Tier 2 (Bank account owners)

Transfer Limit: ₦200,000

Requirement: 

  • Bank Verification Number (BVN)

Tier 3

Transfer Limit:₦1,000,000

Requirement: Bank Verification Number (BVN)

 


 

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