KEY POINTS
- El Salvador has launched and supported multiple initiatives around Bitcoin to push adoption
- A January survey showed that Bitcoin adoption dropped sharply in El Salvador in 2023 compared to 2022
- Bukele himself said adoption didn’t deliver as expected, but he insisted BTC has brought ‘profit’ to the country
El Salvador has become known as the Bitcoin (BTC) country since President Nayib Bukele pushed for the world’s top digital asset by market value to become legal tender in the Central American nation. How has adoption progressed in El Salvador nearly three years since it became legal tender?
Bukele’s Push for Bitcoin Country
Since taking the presidential reins, Bukele has not only worked to clean El Salvador’s streets from gangs, but he also campaigned for cryptocurrency adoption across the country, specifically Bitcoin.
BTC officially became legal tender in the country on Sept. 7, 2021, becoming the first nation to use the digital asset as legal tender. The country has since launched various initiatives to hopefully encourage more Salvadorans to use Bitcoin in their daily financial transactions.
Among the country’s biggest Bitcoin-related initiative is the daily BTC purchases that Bukele promised late in November 2022. So far, the Salvadoran government has stayed true to its word, purchasing 1 BTC on a daily basis.
Bitcoin Office Website/Screenshot
Bukele has established a “Bitcoin Office” and even set up a website dedicated to transparency over its BTC purchases. As of early Friday, the country’s Bitcoin holdings stood at 5,857.76, worth some $345 million, based on current prices.
The Bukele administration has also backed multiple Bitcoin education programs across the country, including the Mi Primer Bitcoin program, which also recently celebrated its third anniversary.
The populist leader championed plans for a “Bitcoin City” that will be funded by a Bitcoin bond. There’s also the so-called “Bitcoin Beach” a surf town wherein many stall owners accept BTC payments. The town uses the Bitcoin Beach application to make transactions in BTC.
How was Adoption in El Salvador Last Year?
A survey published in January by José Simeón Central American University revealed that only 12% of Salvadorans used BTC at least once to make financial transactions last year, marking a staggering drop to the 2022 figures, which stood at 24.4%.
The survey also revealed that over 93% of the local population were not convinced BTC adoption had a positive impact in improving life in El Salvador.
How It’s Going as per Bukele
In an interview with TIME published Thursday, Bukele acknowledged that “Bitcoin hasn’t had the widespread adoption we hoped for.” He noted that while “many” Salvadorans use the digital currency and “majority of large businesses in the country have it,” it still didn’t have the level of embrace that the government expected.
Seemingly defending the slow adoption rate in the country, Bukele noted that the government “never forced” its people to adopt the digital coin. Instead, the government “offered it as an option,” and Salvadorans who opted for the virtual currency “have benefited from the rise” in BTC prices.
He went on to note that the world’s first decentralized cryptocurrency has “brought profit to the country,” reiterating that fears surrounding the country’s BTC drive have not yet materialized. “We have seen nothing but benefits,” he insisted.
IMF Pushes Back on El Salvador’s BTC Strategy
The International Monetary Fund (IMF) has been in contentious discussion with El Salvador regarding its Bitcoin strategy for years. In April, the IMF’s Communications Department said there were talks for a possible “IMF supported program,” but with conditions.
The United Nations financial agency said it wants El Salvador to address risks related to BTC. It previously pushed back against the country’s establishment of Bitcoin as legal tender and warned the country of the digital asset’s volatility.
