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The implementation of CBDC (Central Bank Digital Currency) in Nigeria did not unfold as initially intended. It is often observed that African nations are frequently chosen as experimental grounds by influential individuals. Nigeria embarked on a gradual introduction of its digital currency called , built on the Hyperledger Fabric blockchain. The responsibility of operating the nodes of this digital currency rested solely with the Central Bank of Nigeria (CBN). During initial stress tests, it was stated that this currency could handle up to 2,000 transactions per section. In October 2021, the government introduced incentives to encourage citizens to adopt the CBN's digital currency.
However, even after a year had passed, the country remained hesitant to fully embrace the transition, prompting the central bank to resort to coercive measures. Consequently, in October 2022, the CBN made the decision to terminate and recall the currency, with the intention of regaining control over the circulation of currency within Nigeria.
The CBN declared that the existing paper notes would retain their status as legal tender only until January 31, 2023, effectively leaving the population with no choice but to convert their cash. The act of canceling currency was not unfamiliar to Nigerians, as the government had carried out similar actions in the past.
The ultimate objective openly proclaimed by the CBN was to achieve a completely cashless society, with eNaira as the replacement. However, the adoption rate of eNaira remained extremely low, with fewer than 0.5% of Nigerians embracing the digital currency. This discontent among the people led to widespread protests that erupted across the nation.
On December 2, 2022, the Central Bank of Nigeria issued a letter to all banking institutions, imposing a strict ban on physical cash transactions.
In accordance with the new directive, the central bank established specific limits on cash withdrawals. Individuals were restricted to a maximum withdrawal of ?100,000 ($225) , while businesses were permitted to withdraw up to ?500,000 ($1,123) within the same timeframe. Requests for larger withdrawal amounts incurred a processing ranging from 5% to 10%. Furthermore, were programmed to dispense a of ?20,000 ($45) per day, and only notes with denominations of ?200 ($0.45) or lower were available through these machines.
According to a report by Bloomberg, approximately 90% of the population in Nigeria relied on cash for their transactions. However, despite their reluctance, the people were left with no alternative but to transition to CBDC. The demonetization of the currency resulted in a significant reduction in available cash, from 3.2 trillion nairas to 1 trillion nairas. To compensate for this shortage, the central bank created over 10 billion eNairas. The continuous protests by the people reflect the destabilization caused in a society that heavily relied on cash interactions.
The People vs. CBDC: the Battle for Financial Freedom
This scenario serves as the starting point of a larger trend. Countries like Nigeria are being utilized as test subjects before these programs are rolled out in Western nations. The concept of currency cancellation may be difficult for Americans to comprehend, as it has never occurred in the United States. However, the Federal Reserve has expressed interest in exploring such options. They promote it as a matter of convenience for the people, but in reality, it is a means to exert greater control over money, ensuring that every cent remains within the purview of the government's authority. They aim to eliminate any possibility of untaxed funds, and as the program expands, they could potentially exclude individuals and organizations from participating in society altogether. Having some bitcoin before this all will happen, isn't a bad idea. How much? It doesn't matter. The only wrong allocation is zero sats.
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