As Nigeria braces to receive the e-Naira, which is set to be launched by the Central Bank of Nigeria (CBN) on October 1, 2021, many are starting to inquire about the security of this new digital currency and if it is vulnerable to hackers.
Nairametrics reviewed publications from the Central bank of Canada and interviewed security experts on the matter.
Securing your e-Naira would be by Proof of ownership, you could either keep them in a bank account, or you keep them in an e-wallet that contains the CBDC tokens’ “anonymous” private key. The e-Naira would be maintained in an account, the account’s distributor (usually a commercial bank) must validate your identification before opening the account. These KYC standards are in place to prevent money laundering, terrorism financing, and other financial crimes.
The big advantage of account-based ownership is that it reduces criminal activities and we know quite well how to effectively protect these accounts from hackers. Also, if an account owner forgets the password to the account, the money isn’t lost. Access to the account can be restored once the rightful owner has been identified beyond doubt.
But of course, the problem with account-based ownership of CBDC is that it is not anonymous and that in emerging markets (especially), millions of people do not have access to banks. There are legitimate reasons why people want or have to use physical cash as a medium of exchange and if we want to introduce CBDC as a true alternative (or substitute) of physical cash, there needs to be some form of privacy protection.
