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In order to improve the payments system resilience, competition and enhance the future of payment needs in a digital economy, the Central Bank of Nigeria recently launched a project titled “Project Giant” on June 24, 2021, to produce and issue a government-controlled digital currency in Nigeria known as “eNaira”
Natalie Hartman the Vice President, Marketing of Bitt Inc, the foreign firm contracted by the Central Bank of Nigeria (CBN) to develop its Digital Currency (CBDC), shared some insights in a recent interview with Ripples.
The VP also weighed in on why El Salvador chose to adopt cryptocurrency, and Nigeria’s Federal Government embraced CBDC.
Full interview below;
What factors made Bitt Inc the most preferred, out of seven other firms, for Nigeria’s digital currency development?
We are truly humbled by having won the highly competitive eNaira project. The process involved multiple stages of presentations, solution walkthroughs, provision of a demo system, a detailed technical evaluation, and thorough vetting of company personnel.
Our experience was also likely a factor – in 2016, Bitt was the first company in the world to digitize a national currency on a blockchain, thus creating the first synthetic CBDC.
Since then, Bitt has continued to evolve our Digital Currency Management System (DCMS) to enable central banks of all sizes to digitize their national currency. The Bitt DCMS includes the necessary applications for all major stakeholders to transact in digital currency: central banks, financial institutions, merchants & businesses, and consumers.
Bitt was key to the development and successful launch of the central bank digital currency (CBDC) pilot of the Eastern Caribbean Central Bank (ECCB) in March 2021. We currently have live deployments in six countries, with five more planned by the end of the year. With this project and our other ongoing projects, we will have live deployments in three continents by Q1 of 2022.
A factor that is not to be overlooked though, is that Bitt is one of only a few firms whose sole mandate is digital currency. For us, the digital currency management system is not one of many products we have, it is not a development project that we are researching, it is our passion.
What were the challenges in securing the contract with CBN?
Nigeria is a sophisticated economy with a very modern infrastructure and set of expectations. It has a large population of 220 million people and a desire to reach a large segment of un-banked citizens. Bitt was charged with providing insight into the functionality and scalability of our solution and how our experience in other markets would translate.
Compared to other countries Bitt has helped launch CBDC, how will Bitt describe the experience in creating Nigeria’s digital currency?
Nigeria benefits from an advanced financial infrastructure, with a strong ecosystem of FinTech, and exceptional technology talent.
We believe that the deployment of Bitt’s product will serve as a catalyst for these mature payments sector to build upon the eNaira and develop creative solutions that have yet to be imagined, further anchoring Nigeria as one of the most progressive financial technology regions in the world.
The Nigerian central bank said Bitt Inc will establish a subsidiary in Nigeria, and CBN will own stake in Bitt Nigeria – how true is this, and what’s the percentage of stake belonging to CBN?
Bitt has established a subsidiary in Nigeria with an expectation that an office in the country will help facilitate smoother partnership with the CBN and create greater understanding of how our technology can meet the needs of Nigerians.
Discussions on a joint venture are ongoing – we are excited to be partnering with the CBN and look forward to a bright future.
With governments across the world becoming more outspoken against cryptocurrency trading, do you think CBDC will outlast or completely replace cryptocurrencies in Nigeria, and other countries?
We believe that CBDCs represent a first step toward realizing a quantum leap in infrastructure transformation that enables global financial networks to interact in a modern, faster, and secure way. It may influence our global thinking about currency generally and those conclusions will hopefully lead to a path where there is greater access to financial instruments, less delay in settlement times, reduced costs in improved compliance processes, and relief to the impoverished.
As regulation becomes clear for cryptocurrency trading, CBDCs offer an opportunity to interoperate with this technology in a compliant fashion.
Regulators around the world are considering how CBDCs could bring more transparency and accountability for compliant crypto trading.
How do you think Nigerians will respond to the eNaira, compared to the adoption of traditional cryptocurrencies?
We are hopeful that the eNaira, with the leadership of the Central Bank of Nigeria, will earn the trust of the people and provide an enhanced payments experience for both banked and unbanked citizens. Over time, because the eNaira is a sovereign currency, we could envision it being used in many scenarios like tax payments, payroll, insurance, financial instruments like lending and credit, among others, whereas cryptocurrency may not be.
Do you think CBDC and cryptocurrencies like Bitcoin can play in the same market like Nigeria?
CBDC and cryptocurrency are foundationally very different assets. A CBDC is issued by the central bank, is legal tender, and benefits from a high degree of safety. Cryptocurrencies possess a very different set of attributes. Therefore, the two are not in direct competition with one another, and can coexist, and perhaps complement each other.
How will Bitt describe the interest of El Salvador in bitcoin despite being unregulated, and Nigeria’s decision to go for CBDC?
Apples and footballs. Given the sophistication of the Nigerian financial system, and the unique challenges in El Salvador, we don’t consider the decisions related.
How long is the contract with the CBN meant to last?
As CBN’s Technology Partner, Bitt is deploying the systems for the eNaira, which is a journey. After the launch of the eNaira, we will work with CBN to provide additional features to the market to expand its value to all Nigerians.
How will you describe the influence of the increasing ban on cryptocurrency markets on adoption of CBDC by citizens of these countries?
CBDC has a much different value proposition than cryptocurrency. A CBDC is issued by the central bank, is legal tender, and benefits from a high degree of safety.
CBDCs are meant to provide a modern, cost-effective mechanism for executing payments in central bank money.
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