But, aside the disadvantages.
let’s deliberate little on some advantages.
Do you think in anyway E-Naira more popularity and usage can stop the fall of naira against dollar and in turn cause the appreciation of naira in future.
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For me the advantages of eNaira that stands out include 
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Efficient business transactions.
This means there are no lag in making payments and receiving payments for business. -
Efficient cross border payment and remittance.
Paying one in another country is now fast and the delay and high fee removed. The same is true for international transactions.
But how will the eNaira compete with the like of USDT?
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The two advantages you just mentioned are win-win for we Nigerians.
But where I wanted a clue is about E-Naira competition with USDT, it’s a topic I really need an insight on maybe we should research more concerning it.
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@Progrezz thank you for bringing this up at this time
On October 25, 2021, the Central Bank of Nigeria (CBN) officially launched the " eNaira"—a central bank digital currency (CBDC). After the Bahamas, this is the second CBDC that is completely open to the public.
I think that there are a couple of reasons why Nigeria introduced the eNaira and one of which was the eNaira is expected to reduce remittance transfer costs, making it easier for the Nigerian diaspora to remit funds to Nigeria by obtaining eNaira from international money transfer operators and transferring funds to recipients in Nigeria via free wallet-to-wallet transfers. Exchange rate reforms, such as a unified market-clearing rate, that reduce the gap between official and parallel market exchange rates would increase the incentives for sending remittances using eNaira wallets.
The benefits of the eNaira are: Fast, cheap, reliable and available payment channel. Support digital economy. Improved economic activities.
Does eNaira increase in value?
The eNaira is legal tender and will be included in the currency in circulation. More importantly, the e-naira will be on par with the physical Naira, with the same exchange value. This means that one eNaira is worth the same as one traditional Naira, i.e. N1=1 eNaira.
What blockchain does eNaira use?
eNaira is CBDC 2.0 for Bitt. Bitt was behind DXCD or DCash in Eastern Caribbean, the second CBDC to hit production.
Can I use eNaira to buy Bitcoin?
No. Unlike Bitcoin which is a cryptocurrency, the eNaira is a digital currency issued by the government. This difference has a big impact on the stability of the currency.
What are the limitations of eNaira?
E-Naira will not grow in value like Bitcoin and other digital currencies. Although, e-Naira being pegged to the value of the fiat naira makes it stable and non volatile, it will make it unattractive to people who want a digital asset as form of investment that can yield profits.
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The question are:
1.How will eNaira help in exchange rate reform or help in the unification of parallel and official exchange rates?
- How will eNaira enhance growth of the digital economy?
I’d start by answering your first question. According to the CBN Governor, Emefiele, He said the eNaira would support a resilient payment ecosystem, encourage rapid financial inclusion, reduce the cost of processing cash, enable direct and transparent welfare intervention to citizens, and increase revenue and tax collection.
His words, “Specifically, the e-Naira is expected to enhance financial inclusion, support poverty reduction, enable direct welfare disbursement to citizens, support a resilient payments ecosystem, improve availability and usability of central bank money, facilitate diaspora remittances, reduce the cost of processing
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Despite the many benefits of the eNaira, the general public is unaware of its exact uses (or whether it is a cryptocurrency or not), and the rollout has been plagued by problems. There have already been negative reviews on the Google Play Store about the eNaira speed wallet app’s malfunction, and the app has been taken down due to “technical glitches,” only to reappear a few days later. The Central Bank has stated that it will not be held financially liable for errors resulting from the use of the eNaira website, an unexpected statement that has not increased public confidence in the currency.
In a pseudo-authoritarian state like Nigeria, relying on a central bank digital currency can also be dangerous. After young Nigerians used cryptocurrencies in their efforts to mobilize against police brutality and state-sanctioned violence last October, the Central Bank froze several of their accounts and then banned cryptocurrencies. As the eNaira becomes increasingly popular, it’s possible that the bank could also use it to target activists in future protests.
The eNaira appears to be the Central Bank’s latest attempt to distract Nigerians from the naira’s woes, despite being proposed in 2017 but not actively developed until 2021. After all, only sustained foreign exchange earnings and free float of the naira can improve the currency’s true value.
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Yes that is true.
Let’s consider this hypothetical situation.
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Progress lives in the UK and i want to send 10000 pounds to my family in Nigeria.
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The option is one, use eNaira as a means of cost effective and efficient payment and two to send dollars.
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If i send eNaira, the purchasing power may decline but if i send dollars my family could make more due to appreciation.
In the long run, people in abroad might not use the eNaira.
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I see it from two perspectives.
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It’s an innovative project by the government which is commendable.
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It wont fly because the youth don’t trust the government
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You’re spot on @Progrezz
However, I make bold to say that E-Naira will not appreciate in value in the same way that Bitcoin and other digital currencies have. Although the fact that the e-Naira is pegged to the value of the fiat naira makes it stable and non volatile, it will be unappealing to people looking for a digital asset as a form of investment that can yield profits. As a result, e-Naira cannot serve as a substitute for cryptocurrency in this regard.
I envisage yet another challenge too with regards to fraud, the rise in internet banking, digital currency and digital payment system has given rise in cybercrime as well. e-Naira will expose more people to the risk of stolen passwords, hacked accounts, internet banking frauds, etc. With the introduction of Central Bank Digital Currencies, there will be a more innovative way for fraudsters to swindle and divert people’s money. The people at the rural areas are more at risk.
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Correct. The problems thay eNaira will create will be more than the benefits.
It’ll start from cybersecurity problem to technical issues such as bug in the software.
Also, the swindlers or scammers will devised new strategy for stealing.
It’ll cause more financial exclusion due to electrification of rural areas and lack of education.
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It is, in my opinion, an excellent piece of technology. It is beneficial to the banking system, and it is a good idea for the Nigerian government to digitalize its currency in order to keep up with the times. The only issue is that it is still the naira. What is the official rate of the naira? What is the black market rate of N450 to a dollar? It is more than N800 to one dollar. That is the issue. But who is to blame? The Nigerian people are not to blame.
Something is unquestionably wrong somewhere. It’s not as if people are doing less work; in fact, Nigerians work harder than Americans, so why is the naira losing value? Definitely, something dishonest, something manipulative is going on with the naira, and the naira is under attack. The naira is under attack, regardless of whether it is digital, block chain, or fiat. So, the only issue with the eNaira is that it is still a naira, which I don’t blame the Nigerian government for because it is something beyond their control.
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Here is the forex growth equation.
Y = X-M.
If the difference between export and import is + it shows we are producing and other countries are demanding what we produce. This is the logical mechanism of strong currency.
How many people demand the naira from other countries? What do they need it for?
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You have a point here; Nigeria is more of a consumer country than a producer country, and this reflects on our Nigerian currency. This, in my opinion, is only one of several factors. There are additional influencing factors.
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Yes, there are other reasons.
I think a good leader could solve the problem identified above but Nigeria lacks it.
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@Progrezz
This is what I think can be done to address the perennial depreciation of the eNaira on the parallel market and what opportunity I see for Bitcoin holders under such situation:
People are looking for alternatives as the naira continues to fall in value. They want to keep their value in something else, which is why they are doing everything they can to gain access to dollars. Bitcoin offers incredible opportunities, which is why many young people are looking for ways to convert their time and energy into foreign currency, whether Bitcoin or dollars, in order to maximize their opportunities. The more hard currencies that enter the country as a result of Nigerian youth exporting their services outside the country while still in the country, the more dollars and hard currencies enter the country.
People want something else because the naira is rapidly depreciating. They want to keep their value in something else, which is why they are doing everything possible to gain access to dollars. Bitcoin has incredible opportunities, which is why many young people are looking for ways to convert their time and energy into foreign currency, whether Bitcoin or dollars, in order to maximize their opportunities. More dollars and hard currencies enter the country as a result of Nigerian youth exporting their services outside the country while still in the country, this attracts more dollars and hard currency into the country. There is a huge opportunity, and the opportunity is that if the Nigerian government makes the right decision, they will be able to stabilize the naira using crypto-currency and Bitcoin. How would these function? It is straightforward. The government may decide to take Bitcoins from our brothers and sisters who are selling their services, doing virtual assisted work, and developing software and give them naira in exchange. The government can then seize all Bitcoins or crypto-currencies and convert them to dollars or any other currency it desires. This brings more hard currencies into the country, which helps to stabilize the naira. That would be the world’s largest power play. So the question is, why aren’t they doing it right now? Some people, it appears to me, do not want that to happen, and they want the naira to continue falling. Those with arbitrage opportunities want the spread between official and black market rates to widen further.
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One of our most serious issues has always been a lack of good leadership, which we unfortunately lack. Fortunately, we have another chance to make things right in next year’s election, but the big question is how prepared we are to avoid repeating our mistakes.
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The entire premise of instituting forex taxes is to prevent national currencies from being exploited by extranational investors. I think that’s a feature, and not a bug if the e-naira is not seen as a good speculative investment. As we have seen from the recent market meltdowns, tying a national currency to the speculative investment cycle would seem to be a long-term net-negative approach considering most countries that have long histories of forex trading currently have high levels of taxation to discourage their currencies from becoming too volatile.
If we are discussing the notion of “money” compared to a “commodity”, the notion of “good money”,“bad money”, and “ideal money” have emerged as concepts originally put forth by John Nash. In that framework, the e-naira would be closer to “good money” than “bad money” in comparison to the regular naira, but in that context bitcoin is not “ideal money” either.
A good “speculative investment” will likely not be the same economic vehicle that serves as “good” or “ideal” money when it is acknowledged that “money” is not meant to be a “store” of value but a representation of value. In a fiat currency, that representation is tied to an ecosystem or national economy compared to a pegged currency which is tied to a commodity or other currency. Pegged currencies make better “stores” of value than “investment vehicles” and conflating the two often makes the discussion around CBDCs oriented towards a conversation that is inclined towards investment and not “store of value”.
Fighting depreciation and speculative investment have two completely different motivations but would seem to have the same goal to a casual observer. I think it is in this regard that looking at bitcoin as a catch-all for both speculative investment and as a money that is resistant to inflation muddles the conversation about why things like stablecoins exist in the web3 space. If the web3 space did not understand the need for less-volatile value storage mechanisms, then stablecoins would not exist. It becomes disingenuous for the web3 space to create stablecoins without acknowledging that the mechanism is there for stability; while further acknowledging that it is completely logical for nations to push for more stable national currencies from their perspective.
I have been saying for years that it is not logical for a government to cede control over a sovereign currency. I think it is optimistic, but it is not a logical proposal to any significant government to completely transition to a cryptocurrency that was not created by that nation. In this context, the CBDC is the most logical solution from a government standpoint when their currency has reached a certain GDP. The Nigerian government’s GDP is too large to consider tying too much into a non-sovereign currency before they would trial their own CBDC. I think all-or-nothing proposals are not going to be practical from any government’s standpoint which is why these pilots and trials are likely going to be more common than trials with Bitcoin like in El Salvador.
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There are two important points in your post I want to discuss about.
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The conversion of money earned by freelancers into bitcoin by the government.
while the proposal is good and thoughtful, i think it may fail on two grounds. It is a violation against human right if the government compel in order to convert their dollars into naira. Also, i think using bitcoin to stabilize forex cant work as it is a volatile digital assets. If you talk about stablecoin, it would have been a better alternative. -
The arbitrage opportunity in forex: Most people think it is because of the profit politician make from arbitrage that is why there is still parallel market. I believe a leader that has the political will will uniform the two exchange rates.
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What a great point and commentary.
You said bitcoin is not a good money or ideal money. Can you explain what you mean by that?
Don’t you think that the government should use stablecoins instead of creating CBDC?
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