Two years ago, El Salvador made headlines around the world when it became the first country to make bitcoin an official currency. Journalists from all over the world flocked to the Central American nation of 6.3 million people, known for its beaches and diaspora living in the United States, to document this momentous occasion.
It is difficult to assess the success of the Bitcoin Law, the legislative project that made the digital asset legal tender, because the experiment has several different objectives: financial inclusion, revenue for the public treasury, and building President Nayib Bukele’s reputation.
The government opened a digital wallet called Chivo and gave every citizen the equivalent of $30 in bitcoin in an effort to get people to use the currency in all types of transactions. Unfortunately, the wallet was hacked and the money was stolen, likely deterring people from using it.
Currently, only 1.3% of remittances sent to El Salvador are made through digital wallets using cryptocurrencies, compared to 4% of remittances sent to Mexico. That being said, an investment research firm called Ark Invest recently reported that bitcoin adoption in Argentina surpasses that of El Salvador.
Mónica Taher, the former Director of Technology and Innovation for the Bukele government’s business promotion agency, InvestSV, believes that the goal of using bitcoin in El Salvador is to increase people’s economic freedom and to empower women to control their own finances. However, she warned that without a coherent educational process, mass adoption will take a long time in the country.
The Central African Republic briefly followed El Salvador’s example, but less than a year later Congress reversed the legislation.
Andrés Engler, a journalist specialized in cryptocurrencies, believes that the move to bitcoin has been an undeniable success for El Salvador. It put Bukele in the headlines and the country is now a strong figure in the crypto industry.
It is difficult to determine whether El Salvador’s experiment with bitcoin has been a success or a failure, but it has certainly been an intriguing experiment that put the country in the spotlight.
