In our previous post, we discussed the fails and a possible route the Federal Government of Nigeria should have taken to help shore up the declining Naira through the launch of E-Naira.
Today, we were told a story we think you need to read and possibly share to your friends and love ones.
To get a better understanding of the origination and viewpoint of this anonymous story teller, let’s touch some basics.
E-Naira is not a cryptocurrency.
E-₦ is a digital currency that is created to represent the physical Naira.
That is all there is to E-Naira.
Unlike cryptocurrencies which are developed on the crypto blockchain and users forming the governing officers of the authenticity of the specific currency,
E-Naira on the other hand is governed by the Central Bank of Nigeria, no one else.
Blockchain as defined by Investopedia
Different types of information can be stored on a blockchain but the most common use so far has been as a ledger for transactions.
In Bitcoin’s case, blockchain is used in a decentralized way so that no single person or group has control—rather, all users collectively retain control.
By the above explanation, blockchain can be defined as a way to foolproof transactions of cryptocurrency.
But since the E-₦ is not a cryptocurrency, there is no blockchain security nor is there a way for future users/holders of the E-Naira to monitor the movement of their digital assets.
Can stablecoins such as E-Naira be launched on the crypto blockchain?
When a digital copy of a fiat [a country’s physical currency] is launched, the purpose of such move is to give a digital representation of the fiat currency, such digital currencies are regarded as stablecoin.
And yes, a stablecoin such as E-Naira can be developed and launched on a crypto blockchain for easy tracking of transactions.
One such example is VNDC, a digital representation of the Vietnamese dong that started trading in 2019.
VNDC [digital Vietnamese dong] was launched on the Ethereum network, making it a cryptocurrency that is a digital representation of a physical currency [fiat].
The story: E-Naira, a digital scam?
While on my way to my place of work in the early hours of Tuesday, 28th September, 2021.
I met a host of elderly men arguing about the possible outcome of E-Naira and the impact it will have on Nigeria’s economy.
Although these people seem like strangers who were joined together by a single discussion.
it appeared as though they all gave their attention to a particular man who explained to everyone there the likely outcome of E-Naira.
Elder Anonymous – “When E-₦ finally gets unveiled few days from now, FG will be looking to convince as many people as possible to adopt the use of this new digital currency.
Some will buy the idea, others won’t.
FG will instruct banks to persuade their customers to convert the naira in their accounts to E-Naira for easier transactions.
At a some point, from persuasion, it will become mandatory that every account holder in a bank have a compulsory percentage of E-Naira in their digital wallet to perform certain transactions.
This will force bank customers hands, which will then see a high number of naira getting converted to E-Naira.
What this conversion means is, the physical Naira will then go back to the CBN’s purse and citizens will be holding a digital copy of their naira in form of E-Naira.
For the sake of explanation, let’s say the E-Naira will see an initial launch of 1billion E-Naira.
But after circulation and exhaustion.
Since the CBN is the only governing body monitoring the production and transaction of E-Naira.
In a short time, more E-Naira will be manufactured to suit demand.
At this rate, the amount of E-Naira in circulation will no longer be publicised to avoid a complete shutdown of the economy.
But this information is only being hoarded like palliative from average Nigerians, not banks or top government officials.
Soon, those in power will start storing more physical naira notes in their houses and dumping E-Naira on banks.
In no distant time, banks will no longer have physical naira to match the flow of E-Naira.
This will then result to people queuing on ATMs, pos stores and every physical naira dispensing outlet for physical cash.
To quench this pressure, banks will be instructed by the single governing party of E-Naira which is CBN, to start exchanging 1000 E-₦ = ₦1.
When you get into a bank to request for physical ₦ in exchange for the E-₦ in your wallet, you will be greeted with a shock as your E-₦100,000 is converted to ₦100.
Any financial expert will tell you that this is a simple currency line or exchange.
Unfortunately, the already suffering Nigerians which is me and you, will be made to suffer more for the good of Naira, while those in power remain unaffected.”
As this seemingly uneducated-in-the-line-of-digital currency elderly man turned from the standing crowd to take his leave, I walked to him to try to get at least his name or line of work but his reply was even more heart breaking
“My names or profession will not save us from the dangers coming, my generation failed your generation. I hope your generation do better than mine has done.” – Elder Anonymous