🇸🇻 El Salvador: How Unconventional Economic Decisions Lead to Surprising Outcomes

🪙 In June 2021, the President of El Salvador, Nayib Bukele, introduced a bill that was enacted in September of the same year. This legislation mandates the use of Bitcoin for the payment of goods and services by businesses and organizations in El Salvador.

💰 Currently, El Salvador holds cryptocurrency assets amounting to over 5,700 BTC, valued at approximately $312 million USD, placing it fifth among countries that have officially disclosed their cryptocurrency holdings.

✍️ Despite the active promotion of cryptocurrency, which has enhanced El Salvador's image, the country also faces criticism and risks associated with this decision:

1️⃣ Criticism from Regulators: The International Monetary Fund (IMF) and the World Bank have harshly criticized the use of Bitcoin as an official means of payment and have urged El Salvador to abandon it.

2️⃣ Low Adoption Rates in Retail: In El Salvador, only about 20% of stores and cafes accept Bitcoin for payment of goods and services.

3️⃣ Costly and Time-Consuming Conversion Operations: Converting cryptocurrency to fiat and vice versa can be lengthy and expensive. For example, exchanging Bitcoin for fiat through ATMs can take up to half an hour, with transaction fees around 5%.

4️⃣ Low Levels of Education and Trust Among the Population: Approximately 70% of the Salvadoran population does not trust Bitcoin and does not understand how it works. Additionally, due to financial illiteracy, residents of El Salvador may fall victim to fraud and lose their funds due to improper storage of their cryptocurrency assets.

📃 This underscores both the innovative strides El Salvador is making in the realm of cryptocurrency and the considerable challenges and risks that accompany such a bold economic experiment.