…the distinguishing feature of the eNaira as a simultaneous medium of exchange and store of value brings more challenges than the non-conversant eye can see. The paradox here is that any commodity that stores value is subjected to appreciation and depreciation. In the event in which the economic agents expect depreciation, they will be rational as to become unwilling to hold it in order to rescue their investment.
The first-ever digital currency was introduced by the anonymous Satoshi Nakamoto, who aims to create a financial system that can’t come under the influence of government or the corruption and lack of transparency of deposit money banks. This will be possible upon the acceptance of the currency as a medium of exchange, whose supply and demand is purely determined by the equilibrium of the market forces.
Another relevant concern is the epidemic of scamming. The Nigerian economy is riddled with unpatriotic fake news entrepreneurs, to the point that even the educated and enlightened can be victimised by fake news. A significant number of people holding digital currencies would mean an opportunity for scammers to exploit their inexperience and ignorance to bankrupt them.
The digital currency is nothing like the traditional money. It is fiat. Therefore everything about is swift, flexible and capable of outwitting saboteurs. There is no room for inconsistency or any avoidable incidence in its handling. Otherwise, all hell would break loose. Concerning the technicalities of the eNaira, Nigeria appears as a even more vulnerable target. The CBN must ensure proper education among users of the digital currency. Otherwise, it will have to spend massive resources in bailing out the victims of scams involving this. Also, the insurance of ‘depositors’ in relation to this currency is presently not clear.
Moreover, the distinguishing feature of the eNaira as a simultaneous medium of exchange and store of value brings more challenges than the non-conversant eye can see. The paradox here is that any commodity that stores value is subjected to appreciation and depreciation. In the event in which the economic agents expect depreciation, they will be rational as to become unwilling to hold it in order to rescue their investment.