The CBN has announced its imminent launch of the eNaira, a sort of cryptocurrency or digital token aimed at facilitating increased use of the Naira, financial Inclusion and easier remittance.
According to the CBN, the eNaira will have a non-interest bearing CBDC (Central Bank Decentralized Currency) status, with a value-based transaction limit for customers.
The CBN while racing towards the launch of the eNaira has partnered with Bitt Inc; a Barbados-based cryptocurrency development company which is notable for undertaking a similar project in the Caribbean.
Bitt Inc. is known to have successfully developed “DCash” an eCurrency on behalf of the Eastern Caribbean Central Bank.
It is the hope of the CBN that Bitt Inc. will repeat a similar feat with the eNaira.
So, what’s next for the eNaira project?
eNaira Proposed Launch Date
The CBN has proposed that the first phase of the eNaira would be launched on the 1st of October 2021.
This date coincides with Nigeria’s Independence Day Celebration. So, there’s probably a plot to make eNaira a flagbearer or the focal point of that day’s celebration.
Fast-tracking the CBNs Cashless Policy
Despite the CBN’s previous ban on cryptocurrency and all related activities, the apex bank has shown its commitment towards driving a cashless economy.
I strongly believe that the eNaira is a project that is aimed at fast-tracking the CBN’s Cashless Policy.
Is eNaira Decentralized or not?
From the look of things, eNaira is not completely decentralized.
However, it enjoys some decentralized features such as the use of the Blockchain, but with a central clearing system which is controlled by the CBN.
So, instead of users having a stake in the eNaira and subsequently providing proof-of-stake like in many other decentralized currencies, the staking power might be given to the banks who then facilitate transactions on behalf of the final users.
So, in the case of the eNaira, users are only users. They do not have any voting, staking, or mining power.
The whole eNaira ecosystem will be controlled by the CBN and their group of banks.
How Safe is the eNaira Wallet?
The eNaira Wallet would work like any other bank app, with multiple authentications to keep users secure.
So, the eNaira would be very safe.
It also seems likely that the eNaira Wallet would act like a sort of mirror to your bank account.
It would reflect the amount in your bank account in digital format and can be spent to the limit of value in your bank account.
How Much will the eNaira be Worth?
It is still unknown if the value of the eNaira would be pegged to that of the Naira, a la Stablecoin or if it would be allowed to float.
My guess is that it would be allowed to float, starting with a specific value, and having a burn rate that would favor the rise of the Naira.
In that case, the value of Naira in the bank would be dependent on the changes in value of the eNaira.
This will make for an interesting view as we await the launch of the eNaira.
Would the eNaira Legalize Cryptocurrency in Nigeria?
If adoption becomes widespread and the eNaira gets listed on major crypto exchanges, then it would definitely legalize cryptocurrency and all related activities in Nigeria.
That would be a welcome U-turn by the CBN.
I can imagine being able to exchange eNaira for Bitcoin and Ethereum on Binance in less than a minute.
But again, that brings us back to one issue. Would there not be a massive eNaira dump if its use only becomes a gateway to access other more valuable cryptocurrencies?
Your guess is as good as mine.
How to Trade & Invest eNaira
By the look of things, to start trading the eNaira, you would need your BVN, since the eNaira is essentially tied to Nigeria’s banking system.
Banks will have to conduct a KYC and then issue a pass for the eNaira Wallet which will then house the digital format of your bank balance.
So, essentially, the eNaira Wallet will just be a duplicate of the summary of your bank account.
I don’t know if all accounts will be merged in one eNaira Wallet for those with multiple bank accounts, or if there would be the option to choose which account you want to have an eNaira wallet.
I’m guessing the latter would make more sense.
Trading the eNaira would then be just like making a bank transfer from an app. But maybe this time with a lower or zero fee involved.
So, how do you trade the eNaira with other Cryptocurrencies?
I’m guessing that the current P2P model will continue. Instant Inter-wallet transfers between peers would be used to facilitate trades of other Cryptocurrencies.
But then, there might be a roadblock, as the CBN is proposing to administer a 50,000 token limit per eNaira wallet.
I’m not sure how true this is, but it would definitely be a deal breaker for crypto traders as well as other big players who want to come in.
Just imagine a big player like Binance allowed to only hold a maximum of 50,000 tokens in their eNaira wallet.
What then would be the use of that? Especially when you consider that they would then be subject to the CBN rules for eNaira.
Well, maybe 50,000 tokens of eNaira would not be equal to 50,000 Naira.
We can only wait and see.