El Salvador has seen a significant decline in the use of Bitcoin and other cryptocurrencies for remittances in the first half of 2023, according to data from the nation’s central bank, Banco Central de Reserva (BCR).
Journalist and university professor Edwin Segura shared that Salvadorans living abroad sent around $4 billion back into the country. However, only $46.7 million of those remittances were sent through digital currencies. Traditional banking institutions processed $1.45 billion and dedicated remittance platforms, such as Wise and Remitly, handled $2.4 billion.
Overall, remittances to El Salvador rose by 5.2% in comparison to the same time the previous year. However, the use of Bitcoin has decreased significantly, by $16.8 million, in the same period. On the other hand, banks and fiat payment platforms saw an increase, with banks rising by 12.1% and remittance companies increasing by 2.3%.
El Salvador’s President Nayib Bukele had previously highlighted that the Salvadoran people were paying around $400 million in remittance fees annually. By introducing Bitcoin as a means of remittance, the government sought to provide savings and a more secure payment system to its citizens. Remittances are a major part of the El Salvador’s economy and are projected to reach $7.8 billion in 2021, which is approximately 27% of the country’s GDP according to World Bank figures.
It appears that the country’s Bitcoin project is facing some headwinds as the 2022 survey revealed that two-thirds of the population deem it a failure and three-quarters of the population have never used cryptocurrency. Furthermore, El Salvador has suffered paper losses of over $60 million on its 2,381 BTC investment.
Overall, it is clear that El Salvador’s Bitcoin project has not seen the success that was hoped for. Despite this, it is possible that the situation will improve in the future as more people become aware of the advantages of digital currencies and the nation’s remittance industry continues to evolve.