The Abc Of E-Naira

It is no longer a presumptuous statement that the future of the global economy is digital currencies. Cryptocurrencies are a form of digital or virtual currencies, which is based on a decentralised network of blockchain that can be used for the exchange of goods and services. In simple terms, blockchain is a digital ledger technology and a decenteralised way of storing information across several connected computers called nodes so that everyone can access the data and mine or trade the cryptocurrencies. The distinctive feature of this technology is that the data is cryptographically engraved against hacking and counterfeiting because they are stored in blocks that are bound by a chain that allows individuals to securely deal with each other without an intermidiary like banks and the government. Consequently, the currencies have unstable tendencies due to their decenteralised nature.

However, rather than throw caution into the wind, many nations have approached dealing with the cryptocurrency/digital currency market with scepticism and a lot of reservations because they are not issued and regulated by any sovereign authority. Thus, nations like Nigeria, through the Central Bank of Nigeria outrightly prohibit banks, fintech, and other financial institutions from dealing and trading in cryptocurrencies which have resulted in a decrease in the growth of digital and virtual currencies.

On the other hand, and more interestingly, the Central Bank of Nigeria launched “Project Giant” on June 28, 2021, to issue a government-controlled digital currency to be known as “e-Naira” which is similar in operation to the Swedish “e-krona”.

How does it work?

  • The “e-Naira” will have the same flat rate and value as the normal physical naira, and its growth will be stable because it will be pegged against the naira unlike Bitcoin and other cryptocurrencies.
    The e-naira will have a non-interest bearing Central Bank Digital Currency status (CBDC) and zero charges on transactions such as; peer-to-peer, user-to-merchant, and merchant services.

  • It can be purchased through Financial Institutions and transferred to an e-wallet (created independently from an individual bank account) which has limitations and KYC requirements according to their tier level.

  • Tier 1: transfer limit transaction of #50,000, and a cumulative balance of #300,000.

    Tier 2: transfer limit transaction of #300,000 and a cumulative balance of #1,000,000

    Tier 3: transfer limit transaction of #1,000,000 and a cumulative balance of #5,000,000

    Merchant wallet: transfer limit transaction of #1,000,000 and a limitless cumulative balance.

    Tier 1 KYC: for customers with no existing bank account; phone number validated by NIN.

    Tier 2 and 3 KYC: for customers with an existing bank account; only BVN is required.

  • The technical partner of the CBN is the global Fintech Company; Bitt Inc.
  • The e-Naira is expected to be launched on October 1, 2021.

It must be said here that digital currency has come to stay. The earlier we all embrace it, the better. It is our hope that rather than outright prohibition, the regulators should be more transparent and more engaging with operators of other digital currencies so that our economy will be better for it.

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