E-Naira: Benefits and Possible Risks

Nigeria is headed towards joining five other countries in the world to launch their own central bank digital currency called eNaira. The countries include the Bahamas, Saint Kitts and Nevis, Antigua and Barbuda, Saint Lucia, and Grenada. A Central Bank Digital Currency is the digital form of a country’s fiat currency (A fiat currency is a government-issued currency that is not backed by a physical commodity). eNaira is not a cryptocurrency like Bitcoin and Ethereum as it is issued by the Nigerian government, but it will run on the blockchain technology. It is to serve as a medium of exchange and a store of value.

What to Know About the eNaira?

  • It will be issued by the Nigerian government through the Central Bank of Nigeria.
  • The value of the eNaira is the same as the fiat Naira.
  • It will be as stable as the fiat Naira.
  • To open an eNaira account, you require a SIM card, and your National Identification Number must be linked to it.
  • It will be used through a mobile application.
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Features of the eNaira

1.   Unified Payments and peer-to-peer payment: Once an eNaira wallet is opened, you can transfer money from your savings/current account to the eNaira wallet and vice versa, transfer from your account to someone’s eNaira wallet that is not in Nigeria, and do a transfer from your eNaira wallet to another eNaira wallet.

2.   Bank Account Management: One can view transaction history, check balances, and monitor their wallet.

3.   Contactless payment: One can make an in-store payment using the eNaira wallet by scanning QR codes.

Why eNaira?

  • This digital currency will promote financial inclusion, meaning those who are unbanked can get easier and safer access to money on their mobile phones.
  • It is safe, secure, and can not be forged.
  • It can be traced and, as such, it limits its use for fraudulent activities.

Possible Risks

The Central Bank Digital Currency platforms need to be proactive and preempt fraud before it affects users or Central Banks, they will need to leverage technology to protect user privacy, prevent fraud and defend users, data, and systems from security attacks.

  • Smartphones and mobile banking apps will be used to manage eNaira, and these apps must be safe to avoid fraudsters from exploiting them, as they have discovered ways to influence mobile devices, apps, and operating systems.
  • Fraudsters have been known to reverse engineer apps and construct convincing trojans that appear to be legitimate while being malware.
  • They can even utilize realistic overlays to make it appear as if you’re using the app normally when, in fact, you’re agreeing to give a fraudster significant rights or information that will be used to illegally transfer funds.
  • Privacy of data is another big worry. A multi-layered defense against data leaking is needed to protect privacy. As a result, these apps will have to protect themselves from rogue keyloggers and sloppy screen sharing.
  •  Because the National Identification Number is a necessity for the eNaira wallet and is related to various personal information, keyloggers, mobile malware, and infiltration of the mobile clipboard can lead to the loss of confidential user data.

*Keyloggers are activity-monitoring software programs that give hackers access to your personal data.

Conclusion

With the points raised above being looked into, the eNaira promises to foster economic growth by offering easier access to capital and financial services thereby increasing economical activities at low/no interest rate and to also help increase local and international trade by making transactions fast, cheap, safe, and better. 

Article by Oreoluwa Adegoke, CFE

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