In September 2021, El Salvador declared Bitcoin one of its official currencies. The government hoped to “digitize” the economy, reduce dependence on the dollar, and attract investment. Let’s break down how one of the biggest crypto experiments of our time is going.
El Salvador’s bitcoin backstory.
Bitcoin experiments in El Salvador began in 2019 in the village of El Zonte. Crypto enthusiast Mike Peterson and local resident Jorge Valenzuela paid children in tokens to collect garbage and organized their reception at a local store. El Salvador’s president, Nayib Bukele, took an interest in the case. In 2021 he became the first leader of the country to recognize cryptocurrency as a means of payment.
In November 2021, El Zonte became the site of the Bitcoin Week conference for crypto enthusiasts. At it, Nayib Bukele announced the construction of a city for Bitcoin miners, “Bitcoin City,” for which $1 billion worth of bitcoin bonds were to be issued.
The scale and potential of such mass adoption of cryptocurrency amazed the entire global community. But let’s take a look at what is happening in El Salvador now.
The latest results of cryptocurrency adoption.
According to analysts at The Block, in January 2022, more than half of El Salvador’s population was using the state-owned crypto wallet Chivo. However, several sources report completely different information. For example, the local Chamber of Commerce and Industry found in a survey that 86% of companies have not conducted a single Bitcoin transaction. Only 3.6% of businesses believe cryptocurrency has benefited them.
Analysts highlight several reasons for the doubts about the official adoption of cryptocurrency. For example, a large part of El Salvador’s population does not have a bank account at all and gives preference to cash payments. Moreover, most people in this country do not have a smartphone, computer, or another device to make crypto transactions. According to some reports, even the Internet is used by only 50% of the population. Surveys also show that many people in the country do not know about cryptocurrency at all.
Additional reasons for the unsuccessful start of the crypto experiment are failures with the system itself: payment errors, transfer delays, incorrect display of account balance, incompetent and slow work of technical support service, fraud cases, and others.
Analysts from around the world are closely watching the largest crypto experiment that has ever succeeded. And the forecasts of the world community are very contradictory. Let’s see where Bukele’s enthusiasm will lead and what the future holds for El Salvador. Anyway you can always buy BTC or swap your crypto to another here.
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