On September 7, El Salvador celebrates three years since it became the first country in the world to legalize the Bitcoin cryptocurrency. Despite the intervention of the State in making Bitcoin an alternative payment method, the Salvadoran population still does not make massive use of the crypto asset.
In September 2021, the Legislative Assembly of El Salvador approved the Bitcoin Law in express format. This meant that citizens, companies and institutions began to mandatorily adopt cryptocurrency as a form of payment.
Since then, the Nayib Bukele government has set up an entire infrastructure dedicated to cryptocurrency: ATMs everywhere and institutions that charge only in Bitcoin, such as the pet hospital ChivoPet. Also, at one point, the digital wallet ChivoWallet was launched, which had an initial fund of $30 in Bitcoin, paid with public funds, for every Salvadoran over 18 years old, but the project did not take off.
In 2023, eight out of 10 Salvadorans will not use cryptocurrency, according to a survey by the University Institute of Public Opinion (Iudop) of the Central American University José Simeón Cañas (UCA). And at least half of those surveyed disagreed with the State using public funds for this.
According to the Bukele government, El Salvador has spent around 400 million dollars on cryptocurrency operations, including the purchase of coins. Information that cannot be verified because it is confidential.
In addition, El Salvador has sold the use of cryptocurrency as an alternative for people who send remittances to El Salvador to avoid paying the commission charged by agencies for the transfer. If digital currency is used, the transfer would be free, however, transactions are not growing.
Between January and May 2024, El Salvador received $3.39 billion in remittances, According to the country’s Central Bankand of this amount only 35 million, or 1%, was sent through electronic wallets. The rest continues to be sent through traditional agencies.
The acceptance of cryptocurrency among the trading population also crashed into reality due to a lack of knowledge in the area.
Edwin Fernández is a wholesale merchant at the municipal market of Santa Tecla, in La Libertad, one of the most populated departments in the Central American country. He prefers to do business using the dollar, a currency that was introduced to the Central American country in 2001 during the right-wing government of former president Francisco Flores.
“I don’t like to use it, only cash. I don’t like Bitcoin. I’m a businessman and I deal with cash rather than Bitcoin,” he told the Voice of America.
On the other hand, Manuel Hernández, a telephone service seller, believes that the use of Bitcoin is varied.
“There are ups and downs in Bitcoin, but those who know have fun. The truth is that almost no one uses it, but that is because they do not know how the cryptocurrency actually works. The people who use it do so because we know how it works. Among my social circle, there are few people who use it,” he added. VOA.
Cryptocurrency users tend to make purchases with Bitcoin at large supermarket chains and restaurants, according to surveys. They also use it to pay for services at some public entities.
Although Bukele himself recently acknowledged in an interview with TIME magazine that Bitcoin “has not had the widespread adoption that we expected,” he did boast that legalization gave El Salvador a “brand,” “it brought us investments, it brought us tourism,” said.
In 2021, Bukele promised cryptocurrency fans around the world that he would build a “Bitcoin City” in El Salvador, a metropolis of sorts that would be powered by geothermal energy and would be supported and funded by cryptocurrency. It would also be a tax-free city. So far, the city has not been built, but the government has seen tourism grow.
According to data from the Ministry of Tourism of El Salvador, 3.4 million international tourists arrived in the country in 2023. This meant a 33% increase in visits compared to 2022.
One of the attractions that foreign tourists look for are the beaches on the Salvadoran coast, including surfing beaches where almost everything can be paid for with Bitcoin.
One of those beaches is El Zonte, where Bitcoin began in El Salvador, although it is not linked to the government. The beach is located in La Libertad, and like other nearby beaches, it has several shops where you can pay with Bitcoin for everything from a soft drink to a hotel room.
However, at the national level, the adoption of Bitcoin is still seen as a measure far removed from what the government initially proposed: bringing unbanked Salvadorans closer to a digital fund management system.
In addition, its legalization has faced obstacles: it has not been well received by international credit organizations such as the International Monetary Fund (IMF), which accepted on April 4 that Bitcoin is “key” to the talks it is having with the Salvadoran government regarding a loan for 1.3 billion dollars.
The government, however, is embracing cryptocurrency with an estimated 5,600 bitcoin coins worth more than $400 million. This is in the midst of an economic crisis.
Nearly half of the population in El Salvador does not have access to formal employment with social benefits such as health and pension savings, according to the National Office of Statistics and Census (ONEC), which assesses the quality of life of citizens through its annual survey of “Multipurpose Households.”
In 2023, 42.5% of Salvadorans survived thanks to “underemployment”, that is, jobs without legal benefits and in precarious conditions.
Since 2021, the minimum wage in El Salvador has remained at $365 per month. According to the law, this must be reviewed at least every three years, taking into account the cost of living, which includes food, clothing, housing and education, among other factors.
Despite the fact that the basic basket of goods has increased by 30% since the last review, the government has not yet started discussions on a possible increase in the minimum wage.
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