Key Takeaways
- On Oct. 1, the Nigerian Central Bank will begin testing its central bank digital money on the Hyperledger Fabric blockchain.
- Inflation in Nigeria has reached over 18%, devaluing the Naira and driving a tech-savvy population towards Bitcoin.
- Nigeria was a major remittance recipient in 2020.
The pilot program for the Nigerian CBDC is expected to begin on October 1st, 2021.
The Central Bank of Nigeria (CBN) will eventually launch a pilot program for its digital currency on October 1st, 2021, after four years of study. The CBDC project, dubbed "GIANT," will be built on the Hyperledger Fabric modular blockchain architecture.
According to someone who participated and requested to remain anonymous since the discussion was private, Rakiya Mohammed, the bank's head of information technology, said during a webinar on Thursday that the pilot would begin on Oct. 1.
According to Rakiya Mohammed, CBN's information technology director, the bank may undertake a proof-of-concept test before the end of 2021. In a webinar with stakeholders this week, CBN officials allegedly stressed that the institution could not afford to fall behind while the overwhelming majority of central banks across the globe made progress with their own CBDC research and development.
Nigeria prohibited cryptocurrency trading in February due to possible fraudulent investments, money laundering, terrorist funding, and other offenses. The CBN urged Nigerian banks and other financial institutions to terminate client accounts linked with cryptocurrency trading.
Despite the prohibition and trade limitations, Nigeria has one of the biggest Bitcoin trading marketplaces in the world. According to a March study on cryptocurrency, 32% of Nigerians utilize cryptocurrency, with the majority using peer-to-peer trading through exchanges and other platforms to facilitate their Bitcoin transaction.
Along with the CBN, the Bank of Ghana has been working quickly this summer toward the pilot stage for its own central bank digital currency. The nation has established itself as a forerunner in creating CBDCs on the continent, believing that central bank-issued digital currencies are superior to and less dangerous than decentralized cryptocurrencies.
However, Ghana's aversion to cryptocurrency is eclipsed by Nigeria's more severe restrictions, including a prohibition on commercial banks and other financial institutions from serving crypto exchanges. Despite this, Bitcoin (BTC) acceptance and peer-to-peer transactions in the nation have remained strong.
What are your thoughts on this recent development?
