CBDC eNaira Debuts Amid Privacy Concerns
PowerKee’s Bastion of Privacy #48 - Nigerians’ lack of trust surfaces as government botches launch
On Monday, October 25th, 2021, Nigeria became the first African country to launch a Central Bank Digital Currency (CBDC). Known as the eNaira, the currency was launched with 500 million eNaira minted, equivalent to $1.21 million, as reported by the Central Bank of Nigeria (CBN).
In the latest Bastion of Privacy, we highlight the challenges the eNaira is facing, along with some of the implications for user security. We also examine how decentralized currencies like the wave of CBDCs being launched currently don’t fundamentally fit with notions of privacy and anonymity due to their centralized backers. Before we dive into this week’s content, we provide an update on the short-term roadmap for PowerKee.
PowerKee roadmap update
PowerKee has been making exciting progress in recent months. The native PowerKee wallet is fully finalized and can be easily downloaded by all current and future PowerKee users. The mainnet is also live and is operating securely and as expected.
For the next steps, the PowerKee team is currently collecting all of the addresses associated with PowerKee investors and stakeholders and will distribute KEE to these addresses. PowerKee masternode activation will follow the KEE distribution. A market listing for KEE tokens will shortly follow this and this listing will provide a liquid marketplace for all PowerKee users.
eNaira app goes missing after launch
Nigeria is the latest country to launch its digital currency, following Chinese footsteps. There’s much to be said for the benefits that decentralization will bring to the country. However, placing the government in charge of decentralization seems unwise and the eNaira’s launch and subsequent setbacks proved this true.
The first major setback that the eNaira encountered was to have its Speed Wallet removed from the Google PlayStore barely 48 hours after it was launched. Initial reports from users suggested the government pulled the app from the Play Store to stop the wave of negative reviews it was receiving.
Reportedly, the app was buggy with many users not receiving initial registration details. One user lamented on Facebook about not receiving an activation email 18 hours after downloading and signing up for the speed wallet.
The CBN claimed other reasons for the temporary disappearance of the speed wallet app. According to them, the app was removed to fix technical glitches and upgrade it. This announcement did nothing to quell fears that the government was botching yet another promising project.
Once the app was relaunched, downloads did not pick up significantly. Merchant adoption has also slowed. Data from the Play Store shows that the wallet meant for merchants had stalled at 220,000 downloads while Speed Wallet downloads (the app for consumers) had stalled at 100,000.
Overall, it’s safe to conclude that this wasn’t the response the government had hoped for. Crucially, the government failed to reassure its citizens’ primary concern - data Privacy.
Government fails to address data privacy concerns
A major concern citizens around the world have about CBDCs is the security of users’ data. A survey conducted by the European Central Bank (ECB) found that most EU residents worry about privacy with regards to the launch of a proposed digital Euro.
According to the survey, what the public and professionals want the most from such a digital currency is privacy (43%), followed by security (18%), the ability to pay across the euro area (11%), no additional costs (9%) and offline usability (8%). ECB Executive Board member Fabio Panetta acknowledged these concerns and stated that the digital Euro can only be successful if it meets the needs of the people. These concerns also explain the delays most countries have experienced when developing their own CBDCs.
The Nigerian government did little to reassure its citizens in this regard. To sign up for the eNaira wallet, users must provide their Bank Verification Number (BVN), a critical code that links all of an individual’s information. Given past data lapses and general distrust of government processes, Nigerians believe the eNaira system hasn’t been tested enough to guarantee user privacy.
When presented with options such as the eNaira or other stress-tested cryptocurrencies, it should come as no surprise that the former is witnessing low adoption. Add to this the government’s spotty track record with respecting citizens’ rights, as evidenced by its intimidatory tactics during the 2020 ENDSARS Protest, it’s easy to see why Nigerian citizens would not wish to cede more control to the government.
Privacy-focused decentralized networks offer solution
From the botched app launch to the failure to listen to citizens’ concerns, it's evident that the world’s governments cannot be trusted with valuable personal data. Guaranteeing security is possible only if the network is decentralized from the ground up. For instance, a cryptocurrency like PowerKee that enables instant and cheap transactions anonymously offers a much better solution than ones like the eNaira or the Digital Yuan launched by the Chinese government.
The eNaira is yet another example of how governments fail to implement promising projects that could benefit their people. While it is the first ever CBDC to be launched, questions remain over whether it will be remembered for anything other than this.
PowerKee is a cryptocurrency network that makes privacy easy. Users can transact cheaply and instantly while maintaining anonymity. The PowerKee protocol uses a mixture of zero-knowledge proofs and coin mixing that provides strong privacy to its users.