As Nigeria prepares to receive the e-Naira, which will be launched on October 1, 2021, by the Central Bank of Nigeria (CBN), a lot of people wonder about the security of this new digital currency and whether it will be subject to hackers.
Nairametrics combed into the Central Bank of Canada’s publications and spoke with security specialists on the issue.
Proof of ownership would be used to secure your e-Naira, which you might keep in a bank account or an e-wallet containing the CBDC tokens’ “anonymous” private key. The e-Naira would be kept in an account, and the account’s distributor (typically a commercial bank) would have to verify your identity before opening it. Money laundering, terrorism financing, and other financial crimes are all prevented by these KYC norms.
The main benefit of account-based ownership is that it decreases criminal activity, and we already know how to keep these accounts safe from hackers. Furthermore, if the account owner forgets the password, the money is not lost. Once the rightful owner has been identified beyond a reasonable doubt, access to the account can be reinstated.
The problem with account-based CBDC ownership is that it is not anonymous, and millions of individuals in emerging nations (particularly) do not have access to banks. There are genuine reasons why people desire or need to use physical currency as a means of exchange, and if CBDC is to be used as a true alternative (or substitute) for physical cash, privacy must be protected.
The Bank of Canada has done a fantastic job of laying out all of the risks that a CBDC confronts. In essence, the problem is that most thieves have no idea how much money they have in their wallets. As a result, they tend to target the largest pool of money, such as cryptocurrency exchanges, banks, or, in the case of CBDC, the central bank itself.
Hackers from countries such as North Korea, who have previously successfully hacked into Bangladesh’s central bank, will be targeting CBDC networks.
The most straightforward approach to steal CBDC, according to the Bank of Canada research, is to acquire control of the majority of nodes in a distributed ledger, allowing criminals to control all tokens. This is one of the primary reasons why the CBN is unlikely to use a public network for its CBDC, instead opting for a limited network of cooperating institutions and organizations that are closely regulated and equipped with the appropriate security protections.
Nonetheless, computer power is rising all the time, so what appears unhackable today may not be in a few years. Quantum computing is, in fact, on the cusp of becoming a reality.