The e-naira has been relegated to the background in the cryptosphere. For the reasons discussed below, it is one of the most important developments of 2021, with ramifications until 2022 and beyond.
The platform model
The CBN (Central Bank of Nigeria) design document presents the platform model as a central principle. This involves the creation of a public infrastructure, the key element of which is the central register of the Central Bank; providing API access to existing PSPs and financial institutions.
Enabling innovation in their interactions with ordinary users, who are central ledger agnostic, this design helps preserve the rich ecosystem of existing payment solutions while changing the bottom rails on which the system operates.
Obviously, the acolytes of decentralization will complain that this is a centralized system. A truly decentralized system does not exist today, despite protests from this devoted gang. Fiduciary monetary systems are inherently under the control of the creators of sovereign money, who are the inhabitants of any country, through a disinterested infrastructure. The evolution of the automation of such systems towards programmability and the characteristics of decentralized autonomy will come with time, along with the codification of legal controls and constructions in automation.
The treatment ex post today, marked by latency, is an ineffective means of control compared to prevention ex ante. However, this must not degenerate into a pre-crime unit à la Minority Report. These are the fine lines to walk and explore, as either extreme can escalate into full-fledged crimes. The current version of the e-naira wallet only allows micropayments, limiting their effect on deposit accounts and protecting cardholders from destructive changes.
Such a layered platform approach fits perfectly with the basic CBDC architecture that Bitt achieved for DXCD.
The e-naira is Bitt’s CBDC 2.0. Bitt is the originator of DXCD or DCash in the Eastern Caribbean, the second CBDC to be put into service. Bitt is also an Overstock portfolio company. Bitt’s design for DXCD has remained largely intact in the e-naira. The design offers the decoupling of the front functions of the back-end, where the blockchain is wrapped inside NUMA, as a part of the lower-level infrastructure, accessible only through bespoke APIs.
All interactions with the top level, whether on the business side or the controller side, as well as with the public, are done through multi-factor authenticated interfaces in order to improve the security posture. The blockchain that implements the CBDC registry is Hyperledger Fabric, the e-naira uses the same blockchain. However, Bitt is agnostic about the blockchain used to implement the CBDC ledger.
Bitt’s experience demonstrates a valid path for scaling up innovation. The ECCB (Eastern Caribbean Central Bank) runs a small economy with a currency pegged at 2.70 XCD for 1 USD. Indeed, DXCD can be considered the first CBDC based on the US dollar, by proxy. The Eastern Caribbean is the ideal laboratory for a CBDC, with a small population and economy. But with the challenge of a geographically dispersed archipelago, threatened by episodic digital isolation due to hurricanes and the great opening of the eastern Atlantic. Much better than a ” Sandbox », Which is only a pale simulacrum of the real world. The strategy Sandbox is used by some of the world’s largest economies, including the Bank of England and others. The Sandboxare for children. Bitt deployed DXCD in the real world.
In addition, Bitt’s experience, in a more limited setting, undoubtedly contributed to obtaining the contract for the e-naira with the CBN. Let’s compare the two economies. The Eastern Caribbean has an estimated population of 613,000 with a GDP of US $ 5.46 billion. Nigeria has a population of 211 million and a PPP (purchasing power parity) GDP of $ 1,116 billion. A scale almost 300 times larger. It is not an unknown phenomenon in the digital world. With scale comes diversity, Nigeria has a much larger land mass and diversity in tribes, languages, and economic sophistication with nearly 25% penetration for crypto wallets, much higher than any other country. Thus, the e-naira represents a completely different level of threat than the DXCD.
Vicissitudes of fate
Initially, online retailer Overstock, under the brilliant and maverick leadership of then-CEO Patrick Byrne, launched tZERO, whose primary goal was to change the landscape.post trade, but under the eye of the regulator. tZERO quickly realized that this would be impossible unless you rework the entire chain, from broadcast to payment.
Overstock then launched Medici Ventures. Then Bitt benefited from this struggle, thanks to the investment of Medici Ventures. Notwithstanding, the way a discount furniture dealer played such an important role in creating digital currencies, both in the Caribbean and in one of Africa’s largest economies, can only be explained by through its own success as a platform company. Furniture resale computer systems have helped unite the worlds of cryptocurrency and fiat, ironically, but it also makes sense.
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I like cryptocurrency. I’ve been studying it for several years now, but also investing in it and working in this field. In addition, I do articles on the subject where I try to be crisp!