Recently, El Salvador and Nigeria have been experiencing new problems with the adoption of digital currencies, and now it seems that their amazing “feat” is becoming a lesson.
On September 7th, 2021, El Salvador attracted global attention by being the first country to officially make Bitcoin its legal tender. A little over a month later, on October 25th, 2021, Nigeria officially launched its CBDC, the eNaira, becoming the second country in the world to launch a central bank digital currency. Nigeria received attention for being the pioneer of CBDC in Africa.
In announcing the Bitcoin tender, El Salvador’s President Bukele said, “We must break the paradigm of the past, and El Salvador is making the right move.”
To promote bitcoin use, the El Salvador Government created Chivo, a Bitcoin e-wallet, and issued $ 30 USD worth of Bitcoin to each citizen.
In a country where the minimum daily wage is $13USD, the $ 30 USD worth of bitcoin pre-deposited in the e-wallet was certainly attractive. As of January of this year, more than four million Salvadorans downloaded the e-wallet called Chivo. Yet according to a recent study, only 20% of people are still using the app after spending the Bitcoin. The vast majority of Chivo kiosks in El Salvador have been in non-operational status since February 2022.
Another purpose of El Salvador’s adoption of Bitcoin is cross-border remittances. El Salvador has a population of only 6.6 million citizens, with 3 million global diasporas, mostly in the United States. Remittances from abroad account for 28% of El Salvador’s Gross Domestic Product (GDP). At the time of its design, President Bukele asked to ensure that Chivo could perform cross-border remittance services so that El Salvadorans would pay less in fees to other money exchange agencies. However, recently released data shows that Chivo and Bitcoin in El Salvador are barely being used as remittance channels. Between September 2021 and June 2022, only $108.9 USD million in remittances was sent through Chivo, representing just 1.9% of El Salvador’s total remittance volume of $5.76 USD billion.
Acevedo, the Former President of El Salvador’s central bank, told the media that records show “less than 2 percent of remittances are sent through e-wallets,” which means there is little benefit in this area.
In an interview, New York University Finance Professor David Yermak said, “It’s a cautionary tale that Bitcoin can’t even meet the needs of a small country.” Yermak says the future of tokenized currencies is more likely to be CBDCs or stablecoins. So, what about Nigeria, which launched CBDC?
Currently, it seems that government agencies in Nigeria are “filling in the blanks” for the launch of CBDC, introducing new measures to increase the use of CBDC. Recently, the Central Bank of Nigeria (CBN) announced plans to reduce transaction fees on the eNaira platform by 50%, in hopes of boosting eNaira transactions and promoting cross-border trade in Nigeria. In addition, the CBN plans to work with Nigerian MTN operators to improve the current state of eNaira usage.
Joshua Ogwu, a researcher at The Continental Approach, said that since the launch of e-Naira, only 840,000 digital wallets had been downloaded, of which only a quarter are active. This number is a minute fraction of Nigeria’s total population of more than 260 million citizens. Furthermore, ACU Offers Solutions to El Salvador’s and Nigeria’s Crypto Adoption.Nigeria currently has about 55 million bank accounts.
Prior to this, the Governor of the Central Bank of Nigeria, Godwin Emefiele, said that banks in Nigeria were blocking the adoption of the eNaira because they were concerned that the low-cost eNaira would lead to a loss of revenue from traditional banking services. eNaira’s launch hurt commercial banks. In Nigeria, this concern became a reality.
Bitcoin and CBDC seem to have hit a “bottleneck” upon adoption. The ACU Group, which has been working on the development of financial technology for years, has launched a new plan to ensure that governments and citizens can use digital money as a safer and more advanced payment method, whilst preserving the existing mature and stable financial system. The ACU Group will work with central banks around the world to provide two complete solutions based on their needs.
For countries like El Salvador that have not developed their own legal digital currency and have made Bitcoin legal tender instead; the ACU Group will provide all technical support for the issuance of the country’s legal electronic currency, including all processes involved in electronic currencies, from design concepts to development and launch to global rollout. For this category of countries, ACU Group will assist in the issuance of e-money, as we have done in Malaysia. In Malaysia, ACU launched ACUM, an electronic currency pegged to Malaysia’s legal tender RM (MYR). The ACUM is used and circulated in a global ecosystem that not only realizes the exchange between the electronic currency ACU, ACUM, and RM, reducing exchange losses and exchange costs for users but also directly incorporates RM into the ACU global circulation system, realizing the global circulation of RM and ensuring RM’s share in global circulation. ACU can be linked to gold assets, legal tender …… equipped with asset backing according to the local demand for international transactions, according to the needs of central banks for asset linkage.
For countries like Nigeria that issue CBDC on their own but experience difficulties in using and promoting its new currency, ACU Group will implement the same program as Thailand. In Thailand, ACU Group has launched ACU PAY, an e-money payment program that connects the country’s fiat currency to the application and easily meets users’ daily spending needs. With ACU’s global presence, ACU PAY can be used all over the world. At that time, by accessing the country’s CBDC to the system, it will be easy to circulate the CBDC of the partner country globally without having to encounter similar roll-out issues as the e-Naira.
For countries in different situations than El Salvador and Nigeria, ACU Group will provide differentiated services according to the needs of the central banks. As a leading global blockchain company, ACU Group has developed its own blockchain technology, launched the electronic currency ACU, and is committed to being one of the major players and contributors in various fields. Currently, ACU Group is applying its own blockchain technology to the finance-related ecosystem, including payments, swaps, digital banking, and the incubation of other high-quality blockchain projects to assist central banks around the world in solving the challenges they encounter in electronic money and blockchain.