El Salvador took the lead in the world last year and became the first country to adopt Bitcoin as legal currency. Now, after more than a year of implementation, what kind of results have this “Bitcoin experiment” delivered?
El Salvador’s Bitcoin Law went into effect on September 7 last year. According to “CNBC” report, so far, El Salvador’s paper loss of investing in Bitcoin has reached 60 million US dollars, and the related costs of the “Bitcoin experiment” have also cost the government of the country 375 million US dollars. In contrast, the overall utilization rate of Bitcoin has less than ideal.
At the same time, El Salvador’s President Nayib Bukele once boasted about the “Bitcoin City” Haikou claimed to be building and issued a $1 billion “Bitcoin Bond”, but so far there has been no news.
El Salvadorans: Bitcoin usage is not high
Edgardo Acevedo, an engineer currently based in the capital, San Salvador, said that although bitcoin has become a hot topic, the local adoption rate is still very low, and he found that few merchants are willing to accept bitcoin payments, and the people of El Salvador still generally prefer to use it. cash. He says:
Apart from the fact that the country is more recognized than before, I think little has changed, and the economic situation of Salvadorans is still the same as it was a few years ago, if not worse.
In order to assist the application of Bitcoin, El Salvador has launched an encrypted wallet App – “Chivo”, which provides free transactions, cross-border payments, and integrates the Lightning Network, aiming to provide users with timeliness and even distribute value to each account $30 in Bitcoin to incentivize spending.
According to the National Bureau of Economic Research (NBER) survey, 20% of respondents continue to use Chivo after downloading it, and 75% say they wouldn’t go at all if it wasn’t for the $30 government handed out Download this wallet app.
The report also pointed out that currently only 20% of merchants and businesses accept Bitcoin as a payment method.
Another interviewee noted, “While Bitcoin is popular in parts of El Salvador, such as in El Zonte, it is clear that adoption is not high.” He continued:
Major chains like McDonald’s, Starbucks, and most merchants in malls accept Bitcoin – but are the locals using it? not at all. Mostly tourists are using bitcoin.
A survey by El Instituto de Opinion Publica, a public opinion think tank in El Salvador, found that 70 percent of El Salvadorans believe that the Bitcoin Law has not benefited their household economies.
Another survey by the institute found that 76 of the 100 small and medium-sized businesses surveyed locally did not accept bitcoin payments. Laura Andrade, Director of the University of Central America in El Salvador said:
While many large companies claim to be accepting bitcoin payments, they always make excuses, such as “the system is not working properly” or “the bitcoin wallet is not working”.
Laura Andrade added that this means that Bitcoin has never actually penetrated into national commerce, and there is also evidence that Chivo is used by the vast majority of the population, mainly to obtain government-issued funds, but considering that Bitcoin’s volatility and fees, don’t use it consistently.
El Salvador’s President Nayib Bukele also said that the goal of the “Bitcoin Law” is to allow people far abroad to send money back to the country through a cheaper and faster way. More than 2 million people in the country live overseas, and they send money to the country every year. The money returned to the country accounts for more than 20% of the gross domestic product.
However, the latest figures show that only 1.6% of remittances are sent to El Salvador via digital wallets.