Rwanda has executed a very fascinating vision and in line with my proposal for Nigeria to have a digital currency (NairaCoin or any other name) that is tied to the Naira and under the supervision of the Central Bank of Nigeria. In Rwanda, I&M Bank has partnered with a Norwegian fintech company, Blockbonds, to launch a blockchain-based banking application called SPENN. SPENN does digitize national currencies and makes it possible for bank customers to perform different types of cost-free transactions. It has digitized the Rwanda currency, making the Rwandan Franc the first national currency to be digitized. It also means that mobile money may fade and being replaced with blockchain digitized currency depending on how this evolves.
As I noted, my preference is for the government to create our own cryptocurrency, NairaCoin, and tie its value to the Naira. I have a reason for that.
In commercial contracts which need to be insured, most times, you need to put monetary figures on them. If you have a contract that is created on blockchain and quantified in Bitcoin, in Nigeria, for the supplies of items and your partner refuses to do its part, after you have paid, you have to go to court to seek help. I do think most Nigerian courts may note that the Nigerian law does not recognize Bitcoin to assess the true value of that contract. In short, your partner can even countersue that the contract is voidable. Technically, you will have two issues to deal with:
You have to prove to the court that blockchain contracts are legally enforceable in Nigeria. I know of a time when emails were not admissible in courts. And banks would not accept emailed instructions or mandates
Overcoming challenges like this is the reason why SPENN is a brilliant idea and why Nigeria needs to consider NairaCoin. NairaCoin would help Nigeria in its quest for a cashless society as it would eliminate all the transaction fees which are common in Nigerian banking.
Blockbonds together with I&M Bank Rwanda, yesterday officially announced the rollout of the first blockchain based platform, SPENN.
The platform is a mobile banking application that will enable Rwandans to make a range of financial transactions.
SPENN was developed by Blockbonds, a Norwegian financial technology company that is working to formally financially include the unbanked population which remains relatively high in the country.
The application allows smartphone users to transact and pay for goods and services.
Unlike many other blockchain technology platforms, SPENN uses a different model whereby it removes the need for cash by digitalising national currencies.
With Blockbonds partnering with I&M bank, it means that they are the first financial technology players to digitalise the Rwandan franc. It also means that people, regardless of whether they are customers of I&M, can now own a SPENN account.
All services through the platform are free.
The brilliance of SPENN is simply digitizing the national currency and turning into a blockchain system. With that, blockchain-based transactions and contracts can happen without the regulatory quagmire of if Bitcoin or any of the other currencies would survive or not. Yes, there is a high possibility that a new version of cryptocurrency could evolve just as Google came and knocked out Yahoo on search.
If that happens in cryptocurrency, would the presently stored Bitcoin valuable? That is the risk of denominating deals on these currencies, outside the government regulations, because I do believe that out of the more that 1,300 cryptocurrencies we have today, more than 90% would fade within a decade. A national currency, in my opinion, remains the safest way for any nation especially in the developing world to get this right. NairaCoin will do that for Nigeria.
NairaCoin for Agriculture
Also, I do believe that Nigerian agriculture will benefit from cryptocurrency if it is correlated with Naira. Besides the quest for financial inclusion and cashless society, most customers are watching the bank fees. So, it is very critical if the nation can advance financial inclusion and deepen cashless society through a system where financial transaction fees are free. Sure, government is part of the problem with the new 0.005% levy on financial transactions in Nigeria.
I want to see the youth earning NairaCoin through supporting farmers. Yes, when you plow or till the ground, you get paid via NairaCoin. That NairaCoin would be correlated with other major cryptocurrency in the world.
We need NairaCoin as I have noted many times. Yes, simply create a Nigerian cryptocurrency backed by the Central Bank of Nigeria so that Nigeria has its cryptocurrency (NairaCoin) which is tied to the Naira. That will make blockchain contracts more efficient. The NairaCoin will maintain exchange rates with Bitcoin and others, just as paper Naira has with U.S. Dollars and Euro, while making sure that the paper Naira and NairaCoin are always correlated. The impact could be huge and the adoption would redesign industrial sectors since the banking fees will disappear for customers. NairaCoin would not be mined; it would be earned just as the paper Naira. Workers could select to be paid in the digitized Naira. Government can pay youth who are supporting farmers in different extension services via NairaCoin.