Nigeria Digital Currency Set to Compete With Bitcoin – Nigerian Crypto Stakeholders

According to a representative of a stakeholders’ group, Nigeria’s planned digital currency, the e-naira, would likely be a welcome boost to existing efforts to lower the number of financially excluded Nigerians. Senator Ihenyen, head of the Nigerian Stakeholders in Blockchain Technology Association (SIBAN), believes that the viability of such a digital currency will be determined by its design.

According to sources, the planned digital currency of the Central Bank of Nigeria (CBN), whose trial phase is slated to begin on October 1, would be a hybrid central bank digital currency (CBDC). This means that the e-naira will be able to do both retail and wholesale transactions. The issue of the e-naira, according to the SIBAN chief, would not impede the activities of intermediaries such as banks and other financial organizations.

Meanwhile, Ihenyen told News that the e-naira, which will be a digital counterpart of the fiat money, “does not arrive with a magic wand.” He elaborated:

On its effect on the current state of the naira, as long as the e-naira is a digital version of the naira, it comes with no magic wand. At best, it will make cross-border transactions and remittances cheaper and easier—two critical areas Nigeria needs to improve. So Nigeria must fix the economy. We must get the fundamentals right.

The CBN has repeatedly stated its aim to introduce a CBDC into the Nigerian economy since ordering banks to stop serving crypto firms in February. Some observers believe the central bank is pursuing a policy of suffocating crypto trade while promoting the e-naira. The goal of this plan is for the e-naira to surpass bitcoin in terms of popularity.

When questioned if this was the case, Ihenyen voiced concerns that a CBN-issued digital currency or any other central bank-issued digital currency could ever succeed in replacing bitcoin. He points out that individuals who invented decentralized cryptocurrencies like bitcoin and those advocating for the issuance of CBDCs have completely different purposes or goals. Ihenyen elaborated:

CBDCs and decentralized cryptocurrencies are a world apart. By their nature and by design, they do not serve the same purpose. The CBN has pointed out that the proposed e-naira would run on a private and permissioned blockchain which would be governed by the CBN. This is in sharp contrast to the public and permissionless design of bitcoin and many other cryptocurrencies with no central authority. So it is not really a matter of one replacing the other.

As a result, rather than seeing cryptocurrencies and CBDCs as competitors, the SIBAN president sees them as complementary. As a result, while CBDCs are being implemented, Ihenyen believes that a “much-needed risk-based approach to cryptocurrency regulation” is still necessary. He goes on to say that cryptocurrencies in banking and finance should be viewed as fintech advancements rather than a danger to the financial system.

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