- August 14, 2021
- Posted by: Admin
- Category: Uncategorized
You must start preparing to accept the changes that are coming. Well, if you don’t prepare for them they are already prepared for you.
You said what do I mean? Imagine how El Salvador made bitcoin the legal tender in the country.
What do you think the people have been doing before then? They have taken their time to know how to do microtransactions in Bitcoin using the lightning network (LN).
Nigeria is about to enter a new era where our currency is becoming purely digital.
Have you asked yourself how a Crypto transaction works and how you can do it?
With the creation of eNaira, you will have to learn how to make payment with it and how to receive payment with it.
But beyond that is the fact that the eNaira initiative is commendable, Crypto is more preferable.
There are many problems that cryptocurrencies solve that eNaira cannot solve. This article will explain them. I believe that at the end of this short article you will understand why bitcoin and other crypto are what the world needs.
5 reasons why Crypto is preferable to e-Naira
The inflation reason
One of the global reasons for the rise in inflation is due to the fact that the money supply has no limit. The higher the money supply the higher the tendency for the price level to rise.
This problem always leads to a ripple effect such as; low standard of living, depreciating currency, reduction in the real value of money and rises in prices of goods.
The current inflation rate in Nigeria is 17.75%. When you compare it with the inflation rate of the US that is 5.4%, you will understand that the money is low in value.
The creation of eNaira is simply a digital naira and has no limit in supply as well. This means while the unlimited supply of the naira fueled inflation, the unlimited eNaira will fuel inflation too.
When compared to Bitcoin which has a limited supply of 21m, you will understand that this will help to solve the problem of global inflation.
inflation can only be solved when the money supply is actually and truly fixed by a monetary system that is not controlled and manipulated.
The Hedge Reason
One of the reasons why people love cryptocurrency is because of the of stablecoins. Stablecoin is a type of cryptocurrency that helps to hedge the value of money against volatility.
While stablecoins like USDT, USDC etc are pegged to the United States dollar, the eNiara is pegged to the naira.
The question that is begging for an answer is this. Is the eNara a stablecon or a volatile coin? Well, the answer is simple, it is a stablecoin that is highly volatile because it is pegged to the fiat naira.
For instance, the rate of $1 to naira at the time of writing this is N510. Hence, the eNaira cannot protect our money from fluctuations like the USDT will do.
How do we fix this? It can be fixed by allowing USDT and eNaira to coexist, then the government can find a way to make tax revenue.
Decentralization means technological freedom. This is the promise of blockchain and cryptographic technologies.
On the other hand, the centralized system of reserved banks means control and manipulation of the market forces.
With the creation of the eNaira, there is no freedom as to how you hold your money and what you spend it on. There will always be a limitation and control of your digital assets.
You will be required to provide information before you can have the wallet.
In the crypto industry, you don’t need permission to own a wallet.
You don’t need permission to transact. You don’t need permission to receive payment, not even permission from the commercial banks.
While the eNaira uses the hyperledger blockchain, as the blockchain technology upon which the currency is built open, it is a permissioned blockchain.
It makes it different from crypto that has a permissionless blockchain. Most crypto blockchains operate on a distributed open ledger, as such one person cannot dictate what will be and what will not be on the network.
The eNaira is 100% monitored and regulated by the Central Bank of Nigeria (CBN). Well, mining and issuance of coins is the sole responsibility of the reserve bank unless the power is delegated to third parties.
One of the beauties and features of Bitcoin is volatility. The volatility brings profit-making opportunities as the forces of demand and supply differences create arbitrage opportunities.
So, many Nigerians are very interested in Crypto because of the ability to make a profit from the rising and falling of some good coins’ value.
With eNaira, there is no growth opportunity. The coin can only be used for domestic payment and not even a store of value. So, the use cases of eNaira are very few.
Do you like to hold eNaira or crypto? The reason why El Salvador made bitcoin the legal tender is to improve the economy technologically and to protect the assets from the depreciating impact of inflation.
However, we explained in this article how eNaira can benefit you, check it out here.