Three factors differentiating eNaira and Bitcoin

In a bid to curb the growing acceptance of cryptocurrency against fiat, and its influence in the financial asset class, governments are weighing central bank digital currency, to throw a spanner in the works of crypto promoters.

As Nigeria launches its own CBDC, it is important to note that while every cryptocurrency is a digital asset, not every digital asset is cryptocurrency – that’s the thin line between Nigeria’s eNaira and bitcoin, as shown below.

Three factors that differentiate Bitcoin and eNaira

1) Decentralised (DeFi) versus Centralised Finance

Bitcoin is a decentralised finance instrument unlike eNaira, using software written (smart contracts) on blockchains to offer financial instrument without the authorisation of a country’s central bank.

With DeFi, anyone can access non fiat currency like Bitcoin without a bank account, proof of address or government-issued ID, however, eNaira demands these requirements due to its centralized nature, which is controlled by a monetary authority.

So, while bitcoin can be issued by any exchange in Nigeria or around the world, eNaira can only be issued and regulated by the Central Bank through other banks

2)Non interest-bearing versus profitable and investable asset

The heartbreaking thing about the eNaira is that it is non interest-bearing asset, meaning it yields no profitable value for holders, even though it is described by the CBN as a store of value, it is just a payment option.


So eNaira is just another naira in your savings account – only this time, kept in the virtual space – not an investable asset like bitcoin which offers profitable yields, hence, the 116.67% year-to-date gains by bitcoin, ranked among investment asset class of Gold, Stocks and other investable assets.

3) High risk (high yields) versus No volatility (no gain)

In business, the highest yields are obtained from the highest risk, this is the case of bitcoin. It is significantly rewarding, but extremely volatile due to its exposure to manipulation.

The inability to regulate bitcoin makes it a risky asset, which is why the President Muhammadu Buhari-led administration banned crypto trading, and introduced eNaira, which is associated to no risk – due to its central data system that tracks the flow and usage of eNaira by users – hence, its no gain.

Can bitcoin and eNaira work in Nigeria despite differences?

Despite their differences, both Bitcoin and eNaira can operate in the Nigerian market according to Natalie Hartman, the Vice President, Marketing, of Bitt Inc, the company that developed eNaira for the country.

Hartman told Ripples Nigeria that bitcoin and eNaira are not in direct competition, acknowledging they can coexist regardless of their differences.

“CBDC and cryptocurrency are foundationally very different assets. A CBDC is issued by the central bank, is legal tender, and benefits from a high degree of safety.

“Cryptocurrencies possess a very different set of attributes. Therefore, the two are not in direct competition with one another, and can coexist, and perhaps complement each other.” Hartman said.



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