How Successful Was El Salvador's Bitcoin Effort?

Despite Bitcoin's three years as legal money in El Salvador, many buyers are hesitant to accept it. How come, and what comes after that?

It has been three years since El Salvador officially recognized Bitcoin as legal currency.

The government's reserve fund is being augmented by 1 BTC daily.
The fact that buyers can't stay anonymous seems to be turning them off.


Ignoring IMF concerns, El Salvador became the world's first government to accept Bitcoin as legal cash.

Not bad for a policy shift, particularly when you consider that President Nayib Bukele just announced the policy shift three months ago.

After downloading the official Chivo app, all Salvadoran citizens were eligible to receive $30 worth of Bitcoin at no cost.

The crypto markets were agog when Bukele began routinely stating that the government was purchasing thousands of bitcoins to store as reserves.


That was a watershed moment for the tiny Central American country, and for the Bitcoiners who had been fighting tooth and nail to have their digital currency accepted everywhere.

However, the last three years have presented significant obstacles for both.

In his "war on gangs," Bukele arrested tens of thousands of individuals and sparked humanitarian concerns with his extraordinary and savage security sweep. As he dealt with the harsh realities of his nation, he seldom tweeted about bitcoin. A contentious constitutional amendment contributed to his reelection for a second term.

While Bitcoin did reach new all-time highs of $69,000 in November 2021, it was quickly followed by a brutal bear market. Its value plummeted by 75% in the following year as many high-profile bankruptcy rocked the sector. The resurgence of institutional interest in Bitcoin has been relatively recent, spurred by the introduction of exchange-traded funds (ETFs).

Now that we are in the present, we must ask: has El Salvador's bold gamble been successful? What kind of impact does Bitcoin have on people's daily lives? In his quest to revive the economy of the nation, what would Bukele do next?

Researchers from Yale's School of Management shed light on the reality of life in El Salvador, finding that while the government's custom-built Chivo app had "impressive" awareness, the majority of users stopped using it after spending their bonus.

The lack of anonymity was the major problem for the Salvodorans, not the volatility, which may be expected as the primary reason for their reluctance to trust Bitcoin.

Bukele has been consistently positive on Bitcoin's prospects, but at the tail end of August, he gave Time an interview in which he was rather frank.

"We weren't expecting Bitcoin to have such widespread adoption," the president conceded. It hasn't had any bad effects, but I think it might have been more effective. There's still room for development. Instead, it brought us branding, investments, and tourists.

"Those who saved in Bitcoin when we launched it must have made a lot of money," Bukele said, subtly suggesting that he had been correct the whole time.

He also brought up the International Monetary Fund's statement that the Bitcoin fears were unfounded so far, which is likely due to the cryptocurrency's low adoption rate.

Now the chief executive officer of JAN3, an organization dedicated to the adoption of Bitcoin by nation-states, Samson Mow has been an integral part of El Salvador's Bitcoin ambitions. According to Mow, who spoke with Cryptonews, the country's efforts so far deserve a B+.

We're still a long way from closing the knowledge gap on Bitcoin and its advantages, but we're making headway. His email message conveyed his belief that the momentum is there and that the long-term consequences would be seen in the years to come.

According to Mow, "there's a natural hesitation to embrace something perceived as complex or risky," which makes it difficult to ensure that Salvadorans are knowledgeable about BTC.

"Bitcoin and its adoption are marathons, not a sprint," the entrepreneur said, emphasizing the need of patience. Like it has done organically among grassroots users all around the globe, we anticipate adoption to rise as word gets out about Bitcoin's long-term advantages.

El Salvador: What Comes After This?
The government of Bukele is secretly adding 1 BTC to its balance sheet every day, while Bitcoiners are busy with other things.

As of this writing, the country's daily balance resembles a staircase on a chart, and it presently has 5,865 BTC, worth $320 million.


According to Mow, El Salvador should now prioritize informing interested customers about the real-world applications of Bitcoin and how it may help them.

"Making Bitcoin available isn't the only goal; we must also demonstrate how it can enhance people's lives, particularly in areas such as savings, small business transactions, and remittances."

That is an excellent argument. According to the World Bank, El Salvador is one of the top countries that receives remittances, or money sent back by workers overseas. In fact, as of last year, remittances accounted for 26% of GDP in El Salvador. Transactions often take days to settle, and the exorbitant costs charged by fiat money transfer companies significantly reduce the income that people get. Bitcoin, on the other hand, may make these kinds of payments quicker and cheaper, which means more money can stay in local economies.

Although there has only been little success so far, Mow is optimistic that more nations may embrace Bitcoin in the road, and interest in the possibilities of this digital commodity is only growing.

"Other countries are closely watching El Salvador's progress because it has been a trailblazer," he told Cryptonews. Problems like this are inevitable in every revolutionary endeavor, and the lessons learned from them might help others plan for the future. El Salvador's actions will serve as a model for other nations who are considering adopting Bitcoin as a means to achieve financial independence and economic development.

Now that Bukele is in office until 2029, El Salvador will have a proponent of Bitcoin for a while. He may be enjoying high popularity numbers right now, but it seems that the public still isn't sold on his crypto vision.

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