S06 ATR NOV 2021 Banking_ATR - New Master Template 2016 28/10/2021 09:34 Page 20
CRYPTOCURRENCY | REPORT
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Developing countries have high grassroots cryptocurrency activity.
Crypto goes sovereign The rise of cryptocurrencies seems an unstoppable phenomenon. Now, sovereign nations are starting to adopt a digital coinage future. Stephen Williams reports.
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ryptocurrencies are digital or virtual currencies secured by cryptography, which makes them nearly impossible to counterfeit. Most cryptocurrencies are decentralised networks based on ‘blockchain’ technology – a distributed ledger system held by a disparate network of computers. Developing countries have high grassroots cryptocurrency activity. Venezuela represents an excellent example of what drives cryptocurrency adoption in developing countries and how citizens use it to mitigate economic instability. A defining feature of cryptocurrencies is that they are immune from any central government interference or manipulation. But that is changing and a number of countries – especially those that rely heavily on remittances and with economies prone to inflationary pressures – are considering officially adopting and regulating digital currencies.
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Nigeria On the 4 October, Nigeria launched its eNaira cryptocurrency. Originally scheduled for 1 October, but delayed so that it did not clash with independence celebrations, Nigeria has seen a cryptocurrency boom (despite the bank originally banning crypto-transactions) as people sought ways to escape the weakening naira and offset the high cost of living and unemployment in Africa’s most populous country. From October 4, customers are able to download the eNaira app and fund their mobile wallets using their existing bank accounts, according to CBN governor Godwin Emefiele. Emefiele has also advised all
Nigerian businesses and institutions that they must be prepared to accept eNaira payments just as they accept paper currency. Nigeria’s central bank has long been concerned about the impact of cryptocurrencies that are quickly becoming popular among tech-savvy young residents. Young Nigerians continue to explore new ways to make money and store value in the face of double-digit unemployment and inflation – as well as the collapse in the value of the local naira. Earlier this year, Nigeria’s central bank ordered lenders to stop facilitating cryptocurrency transactions over allegations it was
A number of countries are seriously considering officially adopting and regulating digital currencies.
AFRICAN REVIEW OF BUSINESS AND TECHNOLOGY | NOVEMBER 2021
being used for money laundering and terrorist financing. Nigeria selected global financial technology company, Bahamasbased Bitt Inc. for its digital currency launch known as "Project Giant" after more than three years of research into the digital currency. The CBN governor, Godwin Emefiele, was forced to make a public statement (denying scurrilous press reports) that he did not own Bitt Inc. but it is thought that the CBN has invested in the company. "The CBN will rely on the company's tested and proven digital currency experience, which is already in circulation in several countries," a spokesperson for the Central Bank of Nigeria said. The new eNaira will be issued by the CBN as legal tender like the current naira currency and will operate on the Hyperledger Fabric Blockchain. It will also follow the official exchange rate. Emefiele says eNaira will benefit Nigeria's economy in many ways,
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