A Season of Change – Riding the Waves (3)
- The GreenVisor
- Aug 23, 2023
- 2 min read
C. Digital Assets – Cryptocurrency, eNaira
The origins of cryptocurrency can be traced back to a whitepaper published in October 2008 by an individual or group using the pseudonym Satoshi Nakamoto. The paper, titled "Bitcoin: A Peer-to-Peer Electronic Cash System," outlined the concept of a decentralized digital currency called Bitcoin. In January 2009, Nakamoto released the first version of the Bitcoin software, marking the birth of the first cryptocurrency.
The cryptocurrency market experienced a significant boom in 2017, with Bitcoin reaching an all-time high of nearly $20,000 in December. However, the market also witnessed a subsequent correction in 2018, with prices declining and market sentiment becoming more cautious.
Despite the volatility and challenges, cryptocurrencies have continued to evolve, with new use cases and applications emerging. They have expanded beyond being mere digital currencies and are now used for decentralized finance (DeFi), non-fungible tokens (NFTs), and more.
Today in Nigeria, cryptocurrencies are not officially recognised as “legal tender” but are nevertheless used by a significant number of young, tech/digitally savvy Nigerians for anything from buying and selling personal items, business goods and services, to trading “pairs” of cryptocurrencies and fiat currencies for profit.
Most of these transactions are done through peer-to-peer transactions, over the internet, using cloud-based platforms or mobile phone apps.
The flexibility and increased options available to individuals and businesses using cryptocurrencies to transact is very attractive and hard to ignore. Trade across borders – local and global; the bypassing of the “middleman” i.e., banks, in payment processing – making payment settlements faster, in fact instant; and the reliability of the blockchain technology upon which cryptocurrencies are built, continue to drive adoption worldwide.
The Central Bank of Nigeria (CBN), the country’s central bank and apex monetary policy authority, has issued warnings to Nigerians against the use of and participation in cryptocurrencies and crypto markets, and the country offers no protection or insurance against any financial losses involving cryptocurrencies. However, in May 2023, the country’s Finance Act was updated to include taxation of digital assets – of which cryptocurrency is a type.
eNaira is a central bank digital currency (CBDC) backed by law, the full sovereignty of Nigeria, issued by the Central Bank of Nigeria as a legal tender. The eNaria is simply the digital form of the Naira and is used just like cash. It does not yield any interest, just like cash in hand. The eNaira allows for faster settlement of transactions and can be used via transfers wallets or bank accounts or by scanning QR codes.
Launched in October 2021, adoption of the eNaria has been slow but the country continues to find new ways to push and incentivise the populace to adopt this currency.
In summary, digital asset adoption in Nigeria is growing. As the first nation in Africa to introduce a CBDC, the receptiveness of Nigeria to the adoption of new technologies is evident. This openness will serve as a strong advantage to early movers in the digital currency space.
Stay on top of the changes and movements in the digital currency space and be cautious in your adoption and use of cryptocurrencies. The future is Now!
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