eNaira, which is simply Nigeria’s Digital Currency, is clearly, according to an Analyst, Fisayo Fosudo, from a platform named the VULTe, is not a Cryptocurrency but uses technology for online transactions. A company named Bitt, Inc. was commissioned to coordinate the project.
A possibility to be noted is that the emergence of Nigeria’s Digital Currency has the power to take some financial institutions out of business. But this presumption which falls under the negative characteristics, may not be feasible any time soon.
It might still be too early to conclude whether or not the Central Bank Digital Currency, CBDC (eNaira), would cripple or empower financial institutions, knowing that some financial experts may still have to monitor the online transaction procedures and see how impactful the money would be in the internet space.
Also, while the Currency may perform the same function online as the physical cash would do in person to person financial dealings in the real world, there are still unanswered questions regarding how the unstable local and foreign exchange rates would fare when juxtaposed with the Digital Currency value.
Nigeria’s exchange rate systems may not be too complex, but there are mainly two visible kinds: the fixed and floating exchange models. Nigeria operates the fixed Forex rate system, which, of course, has a parallel market.
In Simpler terms, Nigeria’s fixed exchange rate is the official one, as, at the time of conducting the research for this written piece, the fixed exchange rate was N411 to a dollar, and the parallel rate was N530.
CBN’s Description of the eNaira
According to CBN, the eNaira wallet offers a great way of making purchases with retailers on-site, transferring or sending money while tracking rewards programs.
The bank also hinted that Nigerians could link the e-wallet to their bank account or pay as you go with a prepay option.
In addition, the installed security token system makes your information unreadable to fraudsters because tokens are randomly generated every time you make a payment.
It would be reiterated, for emphasis sake, that Digital Currency is issued and regulated by the apex bank. In regards to its functionality, the online money delivers speedy, safe, and simple trading and transactional opportunities to customers and end-users:
- It is exchanged peer to peer.
- It is universal – anybody can hold it.
- It does not yield any interest.
The reality of this Currency in reference to operating in the same capacity as the cryptocurrency, the central bank has clearly stated that it has no investment possibility that generates profits, stressing that it is strictly for exchanges and online transactions.