Two years ago, El Salvador made a bold move and adopted Bitcoin as legal tender in order to stimulate its economy and improve access to financial services. However, it appears that the experiment has not been successful. According to economist Cesar Villalona, Bitcoin is not yet a part of the local economy, as people continue to use dollars for wages, services, and goods.
An opinion poll conducted by the Central American University found that 71 percent of Salvadorans believe that Bitcoin has not helped to improve their family’s economic situation. Juan Antonio Salgado, a 65-year-old newspaper vendor, summarized the public opinion on the currency: “I don’t see that money working, it’s just propaganda. Where’s the benefit? There’s no benefit. It’s a bad investment.”
Crypto currency and digital wallets have been used for less than 2% of the country’s remittances, which make up one fifth of El Salvador’s GDP. The construction of “Bitcoin City” has yet to start and the country has yet to issue the “Volcano Bonds” that would fund its creation. On top of this, the government’s bitcoin purchases have now lost an estimated $45.4 million.
It is clear that the experiment has not worked, and as economist and former Reserve Bank governor Carlos Acevedo noted, “people hardly use it, they don’t have much trust” in crypto. As Al Jazeera asked in their report, “So has the experiment succeeded? The general verdict — not yet, at least.”
