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In a sign of worldwide growing adoption, central bank digital currencies (CBDCs) programs are currently underway in many countries. West African giant Nigeria appears to be the latest entrant in a field that is garnering much attention.
Digital Naira in the Works
The Central Bank of Nigeria (CBN) is planning on launching a digital version of the Nigerian Naira, local news outlet Nairametrics reports. This was made known by Nigeria’s central bank Governor Godwin Emefiele at the 279th monetary policy rate (MPR) meeting on Wednesday.
This comes against the backdrop of February’s directive issued by the central bank instructing banks and payment processors in Nigeria to suspend crypto services to customers.
Emefiele said that the nation’s central bank is committed to making the digital naira a reality.
The CBN boss tried to justify the bank’s recent directive outlawing crypto by linking Elon Musk’s tweets to the recent crash in prices.
Speaking on the reasons guiding the bank’s decision, the Nigerian banker said:
“We have carried out our investigation, and we found out that a substantial percentage of our people are getting involved in cryptocurrency, which is not the best. Don’t get me wrong; some may be legitimate, but most are illegitimate.”
For many crypto professionals in Nigeria, this is a step in the right direction. Hakeem Disu, Founder of bitcoin exchange Koinwa, told Inside Bitcoins, why he thinks things could get better for the crypto sector in Nigeria. Disu said,
“The U.S is also considering a digital dollar, but none of these CBDCs can replace Bitcoin. Now that the CBN is considering the Digital Naira, we should expect a reversal of the ban soon.”
Chike Okonkwo, who oversees strategic partnerships at crypto management firm THRESHOLD told Inside Bitcoins that “Bitcoin has come to stay in Nigeria.” He believes a digital Naira would be beneficial for the industry, as a whole, if done properly.
Others like Victor Asemota, who serves as a partner at Israeli-based Venture Capital firm AnD Ventures, believe a digital naira would end the cycle of corruption in Nigeria. He said:
“This will actually reverse a lot of things. Imagine the Federal Allocation being given as StableCoin? Wherever it goes, the CBN can track. This will eliminate state corruption. Whoever convinced them deserves a Nobel Prize. My guess is that it is @CarmelleCadet Folded hands”
Nigeria Tops Crypto Charts
Bitcoin’s appeal for Nigerians started due to the stringent forex policies adopted by Nigeria’s central bank, some years back. This made it difficult for Nigerians to send or receive payments from abroad. Coupled with the rapidly declining confidence in the country’s fiat currency—the naira, Nigeria’s young population found it easy to adopt alternative currencies like Bitcoin and Ether.
Since then, cryptocurrency adoption has grown tremendously in the West African nation. Nigerians conducted 1.1 million crypto trades on peer-to-peer exchange Paxful in 20202, per reports. The country also averaged $65m per month last year on every transaction.
According to data from Blockchain.com, Nigeria is ranked as one of the fastest-growing markets for Bitcoin worldwide. Recent data from Google Trends show that Nigeria tops the ranks of countries searching on Bitcoin and investing in the asset class.
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