eNaira The CBN’s decision followed two years of contemplation on digital currency technology. Additionally, the CBN’s intention to achieve 80% financial inclusion by the end of 2021 is another motivation to launch digital money.
While there is much information about this digital currency which is soon to be launched, below are six things you should know about the nature of this innovation:
The e-Naira is an electronic representation of paper Naira currency that is issued from the Central Bank of Nigeria. It is expected that the eNaira will be considered a “complementary” legal tender in Nigeria and will have the same value of exchange as the Naira and maintaining an “parity of value” with the Naira. The e-Naira is not likely to earn interest for holders.
The eNaira is based on the blockchain open ledger technology. Making the eNaira with a blockchain ensures there is no way to duplicate or counterfeit eNaira. Every eNaira currency note is distinct.
Why Choose eNaira
It is eNaira was designed in order to alleviate the verification issue by ensuring everyone who holds it that every eNaira is a legitimate token. It is authenticated through the construction of eNaira using the Blockchain.
So instead of purchasing credits for phones, I’ll charge my account at the bank with N100, convert it into eNaira and then transfer the money to my father. My uncle will be able to spend the money straight from his phone , or transfer it to receive cash. Each retail store is more likely accept the eNaira because it isn’t easily counterfeited.
Stablecoins are cryptocurrencies where the price is designed to be pegged to a cryptocurrency, fiat money, or to exchange-traded commodities.
The word that stands out is reserves. but what type of reserves? Stable coins are secured by holding an equivalent to FIAT money, such as those of US dollar. The term FIAT refers to government-issued, but is usually not secured by any other commodity, e.g., gold.
Therefore, a stable coin such as USDT is linked to the currency of which is the US dollar. This keeps an exchange rate that is stable. The word stable means unmovable. It is not immovable. eNaira technically is tied with the FIAT Naira However, does that make it stable? Naira stable? Not exactly. To be considered a stablecoin the eNaira must be linked to a specific currency, such as for example the US Dollar or Euro or even the Yuan.
The Central Bank of Nigeria (CBN) revealed on Wednesday that it has concluded plans for the launch of its Central Bank Digital Currency (CBDC), the e-Naira on the 1st of October.
This was disclosed by the CBN’s Director of Information Technology, Rukiya Mohammed, on Wednesday, in a webinar, themed: “Digital currency and the prospects of CBDC in Nigeria,” organised by the Committee of e-Business in Industry Heads (CeBIH).
The CBN director said 85% of Central Banks globally were working on their digital currency, citing rising digital payments in Nigeria compared to cash payments, which is declining in Nigerian also.
Is eNaira Transferable?
The CBDC would be eligible for local and international transfers with little to no time lag and cheaper transaction fees than physical currencies. Also, it would allow you to transfer existing funds in your bank to your digital currency account.
Why should I use the eNaira?
The eNaira has a low-cost advantage when compared to FIAT. The daily transfers between accounts are at no cost to the holder of the account. Lower transaction cost is a massive incentive as traders will pay no fees for withdrawals and deposits to and from their bank account. No transaction fees reduce the cost of commerce while improving safety.
How will dollar remittance to eNaira work?
The e-Naira will be integrated into the CBN’s forex process, and this is to make it easier to receive remittances to Nigeria. These transfers could be from the CBN crediting e-Naira directly to the International Money Transfer Organisation (IMTO). A Nigerian abroad sending $100 to his uncle can debit his US bank account and credit $100 to an IMTO, who will buy eNaira from their corresponding Nigerian bank. The $100 is converted to e-Naira instantly at a far lower transfer fee which is a real benefit and a significant advantage the e-Naira will enjoy.