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Nigeria’s Digital Currency, eNaira Is Not Cryptocurrency: Read The Difference

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“eNaira is not cryptocurrency. In fact, eNaira is merely another form of the Nigerian Naira, a digital version,” Obi said.

This was part of the argument that a group of friends, among whom were Joy, Obi and Ade, were having.

Obi was reacting to Ade’s response to Joy’s question. Joy had asked if the eNaira is a cryptocurrency like Bitcoin.

But Ade had replied saying he believed eNaira is equivalent to Bitcoin.

However, Obi reterated saying, “It (eNaira) is not cryptocurrency and even the CBN and Buhari know this fact.”

They started arguing after the Nigerian president, Muhammadu Buhari, officially  launched Nigeria’s digital currency, the eNaira.

But what do you think?

The questions now are: Are you one of those whom someone has told that the eNaira is not cryptocurrency?

Would it surprise you to know that Nigeria’s digital currency, eNaira is not cryptocurrency?

Like the three friends, many people, especially Nigerians, are confused about Nigeria’s digital currency.

Some of the questions on some people’s minds are: Is the eNaira a cryptocurrency like Bitcoin, Etherium, Litecoin, etc?

Also, can you mine the eNaira like you can mine other cryptocurrencies like Bitcoin?

Is the eNaira an open ledger?

Also, is volatility a characteristic of the eNaira just like it is for other cryptocurrencies?

Similarly, is the eNaira a blockchain technology?

Will the eNaira make Nigerian Naira become equal to the US dollar?

Similarly, If Naira exchanges with the dollar, Pounds Sterling, Euro, Yen, etc, can it also exchange with Bitcoin?

Also, does it mean that Nigerians and, or anybody, will be able to save their Naira on crypto exchanges?

ALSO READ: Buhari Launches Nigeria’s Digital Currency, eNaira

These are some of the many questions that some Nigerians are either nursing or asking right now.

But before we provide answers to these, we must note a salient fact.

That is to say that one thing is clear here; the eNaira is also a blockchain technology like bitcoin!

Also, just like Bitcoin and other cryptocurrencies, the eNaira is also a legal tender.

However, there are many things that differentiate eNaira from other cryptocurrencies like Bitcoin, despite their similarities.

But let us look at their similarities first.

Similarities:

  1. Both eNaira and other cryptocurrencies are a set of medium of exchanges.

This means that you can use both the eNaira and other cryptocurrencies to exchange for goods and services.

  1. Also, they are legal tenders, at least in some respective locations. You can use both to purchase goods and services.

Meanwhile, while eNaira is a legal tender in Nigeria alone, other cryptocurrencies like bitcoin are legal tenders in countries like El Salvador.

  1. Both the eNaira and other cryptocurrencies are all digital currencies. They are currencies not physical by touch.
  2. Also, they have public acceptance. Although the eNaira is not yet widely accepted beyond the shores of Nigeria, Bitcoin has wider and international acceptance.
  3. Both cryptocurrencies and the eNaira serve as a store of value. This means that you can store fortunes in form of cryptocurrencies and eNaira.
  4. Cryptocurrencies and eNaira have e-wallets to collect the digital currencies. Its like a purse to hold your money.
  5. Both the eNaira and other cryptocurrencies have a database of recordings in forms of codes.
  6. Both cryptocurrencies and eNaira run on blockchain technology.

A Blockchain technology is a chunk of data stored in blocks and connected by chains.

  1. You may not be wrong if you say that the eNaira, just like cryptocurrencies, use cryptography technique to record financial transactions.

The banking industry have, for long, been using the cryptograpgy technique for Automated Teller Machines (ATMs) cards, computer passwords and e-commerce.

Note that banks in Nigeria have been using the technique to record electronic transactions as well as shares by Nigerians.

Likewise, it would seem accurate to note that banks will record transactions of the eNaira using the technique.

Despite these similarities, the Nigerian eNaira is not cryptocurrency! Here is why.

How the eNaira is not cryptocurrency:

  1. While the eNaira is a digital form of the fiat currency, the Naira, cryptocurrencies are not digtal forms of any fiat currency.
  2. The eNaira is the Nigerian Central Bank’s Digital currency while cryptocurrencies are not currencies of any entity.
  3. Also, while only the CBN can mint the eNaira, anybody with the skills and resources can mine cryptocurrencies.
  4. Cryptocurrency is an open source while the eNaira is not. This means there is no central regulator for cryptocurrencies. However, the CBN regulates the eNaira.
  5. While the eNaira exists to specifically complement the Naira in cash, cryptocurrencies are not directly complementing any physical currency.

However, cryptocurrencies can complement any cash currency, though not as a less costly option like the eNaira to the cash Naira, but as a more seamless and more secure way of transaction.

  1. Also, while the CBN mints eNaira, miners mine cryptocurrencies.

Cryptocurrency mining is a complex and energy-intensive process that requires a lot of computer power.

It involves using a computer to solve a mathematical problem with a 64-digit solution to create new coins.

ALSO READ: Factors Causing Rise And Fall Of Cryptocurrency Prices

Miners process one block of cryptocurrency each time they solve a mathematical problem.

The miner who first solves the problem gets the new Bitcoin reward.

All the Bitcoins mined are stored virtually through an online database called Blockchain.

Conversely, minting, interestingly, is a part of mining. It is the process of manufacturing coins using a kind of stamping.

So, minting is a form of bringing new coins (eNaira) into existence.

Meanwhile, minting of the CBN’s eNaira does not require the complex and rigorous process like Bitcoins.

Consequently, while the total number of bitcoins that will ever exist is 21 million, Nigeria has already minted 500 million eNaira even before launch.

  1. Also, while anybody with the specific skills and resources can mine other cryptocurrencies, only the CBN can mint the eNaira.

On Monday, October 25th, 2021, the CBN said, while launching the eNaira, that it had minted about N500 million eNaira already.

  1. There will be only a total of 21 million bitcoins to exist. Precisely, a total of 20,999,999,9769 bitcoins will be created in total.

However, there are already over 500 million eNaira already minted by CBN as at October, 25th.

Also, while Bitcoins get lost during mining, eNaira cannot get lost during minting.

  1. While cryptocurrencies are open ledger, eNaira is not.

Each crypto coin mined is recorded and kept in blocks chained together (Blockchain) and in a computer database using codes- a process otherwise known as cryptography.

By open ledger, it means no single entity controls cryptocurrencies.

However, the eNaira runs on a private blockchain called Hyperledger Fabric.

By private, it means that the eNaira blockchain is accessible and controlled by a single entity, organisation, or enterprise, the CBN.

  1. eNaira is traceable while cryptocurrencies are not.

The decentralised feature of the cryptocurrencies lead to untraceable remittances that bypass the watch of market regulators and regulations.

However, the CBN Governor, Godwin Emefiele explained in a statement that eNaira is traceable because there are components of due diligence in hindering illicit and fraudulent transactions involving eNaira.

  1. The sole aim of digital currencies is to replace paper money. While cryptocurrencies seem to be in line with this goal, the CBN has said that the eNaira is not replacing paper Naira but complementing it.
  2. The value of cryptocurrencies like Bitcoin appreciates and depreciates according to demand and supply. This alteration makes investors to either want to hold the assets or release (sell) them.

Conversely, the eNaira does not appreciate or depreciate in relation and below what the paper Naira value is. Rather, its value is same as the normal naira.

This aspect puts a question mark on the rational behind the claim that the eNaira is a store of value.

  1. While cryptocurrencies have a very high volatility, the eNaira has not.

Just like the betting system, cryptocurrency market thrives on speculations from investors.

To make profits, investors bet that the prices would go up or come down.

Consequently, these speculative bets cause a sudden influx of money or selling off of the currencies.

This leads to high volatility.

But the eNaira is not exactly so, making it different from cryptocurrency.

Meanwhile, the eNaira is gaining wide acceptance.

Massive eNaira acceptance and app download:

The CBN has commenced circulation of the eNaira and it is gaining massive acceptance.

For instance, just 24 hours after president Buhari launched it, the eNaira speed wallet applications recorded over 100,000 downloads from the Google Store in 24 hours.

Likewise, the speed wallet showed a rating of 2.0 from 2,150 reviews on Playstore at about 10 hours after its official launch on Monday.

Similarly, the eNaira speed merchant wallet recorded over 10,000 downloads on Play Store, with a 2.8 rating within that time frame.

This shows that the eNaira is gaining wide acceptance.

Meanwhile, there are requirements you must meet to have an eNaira wallet and have the digital currency.

To have eNaira, you would need a digital wallet to hold it.

eNaira Wallet:

The eNaira Wallet is a digital storage that holds the eNaira.

The Wallet is held and managed on a distributed ledger.

CBN says your wallet has the ability to access, hold and use the eNaira.

Benefits of the eNaira:

The eNaira, according to the platform, offers the following benefits.

  1. Provides fast, cheap, reliable and available payment channel.
  2. Supports digital economy.
  3. Improves economic activities.
  4. It is a simplified and easy cross border payments and trade.
  5. It provides inclusion of excluded people in the financial system.
  6. Also, the eNaira provides improved effectiveness of monetary policies.
  7. It brings ease in tax remittance and collection to support the Country’s growth.

How To access and transact with Nigeria’s eNaira:

The Centarl Bank of Nigeria has, in a post, said that anyone can access the eNaira through the following.

  1. Customers will be able to access eNaira via the wallet.

This access will be in app stores such as Google Play store and the Apple App store.

  1. Also, users can access the digital currency by dialing a USSD short code and following the required steps to perform transactions.

Steps To Open, Fund and transact with eNaira Account:

The CBN has said that the platform will make for easier financial transactions for users of eNaira.

It will provide users the opportunity to send money in form of peer-to-peer payments.

Through peer-to-peer transaction, users will send and or receive money to one another.

But the users will first link their bank accounts or bank debit and credit cards to their wallets.

They must scan a QR code on the platform to get started.

Also, this will allow customers to move money from their bank accounts to their eNaira wallet with ease.

Similarly, users can monitor their eNaira wallet, check balances and view transaction history.

They can also make in-store payment using their eNaira wallet.

How it works:

Explaining how users can operate their eNaira accounts, the CBN Governor, Godwin Emefiele said Nigerians will be able to download the eNaira app from either Google plays store or Apple app store.

He said they will, afterwards, sign into the digital currency’s app and platform and fund their wallets.

They will be able to do so using their bank account or with cash at a registered agent location.

Other countries like China, Bahamas, and Cambodia have also launched digital currencies.

Implications:

Now, we have shown you the difference between the Nigerian digital currency, eNaira and cryptocurrency.

You now, also know how to access the eNaira and the requirements for doing so.

Also, you must not forget that the eNaira will make electronic transanctions seamless for you.

Likewise, note that the eNaira is solely Nigeria’s digital currency which has placed the country among the comity of nations with digital money.

It has also place the country as first in Africa to officially launch the digital currency.

Also, soon enough, Nigerians will be fully transacting with the digital currency.

Likewise, foreign businesses and transactions will be done using the digital currency.

Although eNaira is not a cryptocurrency, it is a digital currency that runs on blockchain technology like other cryptocurrencies.

Anthony Chinonso Ogbonna is the editor of Techuncode media. He is a seasoned journalist whose stint cuts across broadcast, print and, especially, the online media. A graduate of Mass Communication from the University of Nigeria, Nsukka (UNN), Anthony holds a Masters Degree in Multimedia Journalism. He aligns his belief with those of world tech communities, holding tenaciously that the world is solely driven and can only be best with tech. Furthermore, Anthony believes that technology is simple, fun and is not what one, especially Africans, should be scared of, hence, his passion for telling compelling stories about tech in ways relatable to the ordinary user. He has his hobbies in reading and designing (new hobby though.)

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