Bitcoin Experiences Wider Adoption In Nigeria As Protests Against CBDC Surge

Nigeria is one of the few countries that have already introduced its own digital central bank currency. The cashless Nigeria monetary policy aims to gradually limit the use of cash and promote the usage of the country’s own central bank digital currency (CBDC), known as the eNaira. As part of this strategy, the Central Bank of Nigeria (CBN) announced in October last year to reissue certain banknotes. Old notes will then no longer be accepted as legal tender.

However, exchanging the notes has caused problems, resulting in a shortage of cash. Few banks have the new notes in stock. Nigerian business banks complain that the central bank has only delivered a few redesigned Naira notes as a replacement for the worthless notes. There have been reports of long lines at banks and some citizens are afraid of losing their assets. Withdrawal limits and high fees exacerbate the situation. Some of the uncertainty has also turned violent.

Court suspends exchange deadline

According to Reuters, a court has decided to once again suspend the deadline for exchanging banknotes. This was due to a lawsuit filed by three states who argued that the exchange process could disrupt the upcoming presidential elections. Originally, the exchange was only supposed to be possible until February 10th. The court will hear the case on February 15th.

Money policy a crucial election issue

The government and central bank aim to increase control and transparency in the national payment system through the scarcity of cash and the introduction of the eNaira. The switch to the digital central bank currency is meant to curb money laundering and corruption in the country.

However, the digital central bank currency is barely used at the moment. Estimates suggest that less than one percent of the population is using the eNaira. Meanwhile, the country is grappling with an inflation rate of 19 percent, leading some citizens to turn to cryptocurrencies. The high demand for Bitcoin has led to a massive surge in local exchange rates.

As the country’s most populous state prepares to vote on February 25, the situation continues to escalate despite the recent extension of the deadline. In addition to food and gasoline shortages, monetary policy is one of the most pressing challenges facing the nation.

Benjamin Eseoghene, the CEO of Nigerian cryptocurrency exchange Roqqu, stated that the central bank’s eNaira is a failed attempt to steer the Nigerian public away from Bitcoin and towards the country’s CBDC.

At the same time, Bitcoin is finding wider acceptance among the general public, according to Eseoghene. He believes that Bitcoin could be used as a widely accepted alternative means of exchange if the financial system remains overwhelmed and cash becomes less accessible.