Money was never absent in the life of human beings. Since the olden times of trading by barter, cowries, coins, notes in paper and of late, digital transactions, money continues to change its form. Whenever there is a change in money, it alters the manner in which people live, conduct business, as well as the method in which governments manage their economies. The new type of money is being talked about and experimented all over the world today. It is referred to as CBDC meaning Central Bank Digital Currency.
Hearing about CBDCs at first generated the idea of yet another dolled-up cryptocurrency like Bitcoin. However, in reality, the CBDCs are unlike anything. Human hands do not make them and neither are they made by anonymous groups. They are produced and managed by central banks, so the issuers of the currency that we currently use will manage CBDC as well. In layman language, CBDCs would be a digital version of our naira notes but, that the naira would be in all-digital format, with no physical representation.
So, why are we talking about CBDCs in the world? This is because it is so easy to explain that the money is evolving. Lots of individuals do not carry money any more. We have mobile banking, transfers and online payments. The majority of us in Nigeria are already using USSD codes or applications to transfer money rather than walking around with large sums of money. However, even the banking system, which we employ nowadays, is not very fast, cost-effective, and can be not so reliable. By promising to make payments less expensive, more prompt, and more secure, CBDCs are basically destined to stop these ills.
The Nigerian government began issuing the CBDC as one of the earliest in Africa. It was named the eNaira. The concept was that it would make life easier for Nigerians providing us with a secure and easy means of paying in a digital place even in the absence of a bank account. However, being truthful, the majority of the Nigerians are yet to use it. Most are not confident in it. Others do not even understand how it works. Thereby, the question is: what can actually be the future of money and are CBDCs really worth the fuss or another government experiment, that will go away?