Head of Nigerian Crypto Stakeholders Body Welcomes E-Naira Says It “Doesn’t Come With A Magic Wand” – Fintech Bitcoin News

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Nigeria’s proposed digital currency, e-naira, is likely to be a welcome boost to ongoing efforts to reduce the number of Nigerians who are financially excluded, said a leader of a stakeholder organization . However, according to Senator Ihenyen, president of Stakeholders in Blockchain Technology Association of Nigeria (SIBAN), the success of such a digital currency will depend on its design.

A hybrid CBDC

According to reports, the digital currency proposed by the Central Bank of Nigeria (CBN), whose pilot phase is scheduled to begin on October 1, will be a central bank hybrid digital currency (CBDC). This means that the e-naira will combine both retail and wholesale capabilities. According to the boss of SIBAN, this means that the issuance of the e-naira will not disrupt the operations of intermediaries such as banks and other financial institutions.

Meanwhile, Ihenyen told Bitcoin.com News he doesn’t think e-naira, which will be a digital version of fiat currency, “comes with a magic wand.” He explained:

On its effect on the current state of the naira, as long as the e-naira is a digital version of the naira, it does not come without a magic wand. At best, this will make cross-border transactions and remittances cheaper and easier, two critical areas that Nigeria needs to improve. Nigeria must therefore repair the economy. We need to correct the fundamentals.

Bitcoin vs E-naira

Since ordering banks to stop serving crypto entities in February, the CBN has consistently signaled its desire to introduce a CBDC into the Nigerian economy. Some analysts have suggested that the central bank has resorted to a strategy in which it stifles crypto trading while promoting e-naira. The goal of this strategy is to see e-naira overtake bitcoin in popularity.

However, when asked if this was the case, Ihenyen expressed doubts that a CBN or any other digital currency issued by the central bank could ever replace bitcoin. He cites the very different intentions or goals of those who created decentralized cryptocurrencies like bitcoin and those who are pushing for the issuance of CBDCs. Ihenyen explained:

CBDCs and decentralized cryptocurrencies are a world apart. By their nature and by design, they do not have the same purpose. The CBN pointed out that the proposed e-naira would run on a private and authorized blockchain that would be governed by the CBN. This is in stark contrast to the public and unlicensed conception of bitcoin and many other cryptocurrencies without central authority. So it is not really a question of replacing one by the other.

Therefore, instead of seeing them as rival innovations, the president of SIBAN says he sees cryptocurrencies and CBDCs complementing each other. Therefore, Ihenyen suggests that while CBDCs are being rolled out, “the risk-based approach essential to cryptocurrency regulation remains vital.” He adds that cryptocurrencies in the banking and financial system should be seen as fintech innovations and not as a threat to the financial system.

Do you agree with the sentiments of the President of SIBAN? Let us know what you think in the comments section below.

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