Nigeria, which is Africa’s largest economy with a GDP of $514.05 billion according to Statistica has launched Africa’s first digital currency, e-Naira. The e-Naira comes after the other digital currency-cryptocurrency was banned by authorities in February having been said that it exposed citizens to huge financial risks.
Nigerian president, Muhammadu Buhari at the unveiling of the e-Naira said that it could potentially boost Nigeria’s Gross Domestic Product by up to $29 billion over the next decade. The government expects the e-Naira to improve store of value for Nigeria weakening currently as well as drive financial inclusion for millions of citizens.
The e-Naira app went live immediately after the launch and became available for citizens to download and use immediately.
Understanding Digital Currency
A digital currency is a means of payment that exists purely in electronic form. Digital currency helps to foster faster payments, it also [is] supposedly less expensive than the regular payment systems available. Transactions are made person to person with no need for an intermediary.
Digital currencies do not have physical attributes and are available only in digital form. Transactions involving digital currencies are made using computers or electronic wallets connected to the internet or designated networks. In contrast, physical currencies, such as banknotes and minted coins, are tangible, meaning they have definite physical attributes and characteristics. Transactions involving such currencies are made possible only when their holders have physical possession of these currencies.
Digital currencies have utility similar to that of physical currencies. They can be used to purchase goods and pay for services. They can also find restricted use among certain online communities, such as gaming sites, gambling portals, or social networks.
Digital currencies also enable instant transactions that can be seamlessly executed across borders. For instance, it is possible for a person located in the Uganda to make payments in digital currency to a counterparty residing in Zimbabwe, provided they are both connected to the same network.