A year after El Salvador made Bitcoin legal tender and required all businesses to accept it, the experiment has failed due to falling cryptocurrency prices and a lack of use of the government’s Chivo e-wallet app to buy goods or send money.
Nor is the cryptocurrency city proposed by President Nayib Bukele, which offered itself as a tax haven for crypto investors and miners, to be found anywhere, owing to the postponement of the issuance of the “Bitcoin Bond,” that was supposed to support construction.
When El Salvador legalized bitcoin on September 7, 2021, it was worth about US$47,000. A year later, it is worth less than half what it was, and it is now worth about US$19,770, which is one of the reasons why El Salvador’s plan failed.
Salvadoran officials have justified the purchase of 2,381 Bitcoins on the grounds that it is a long-term plan that has influenced investment, reduced bank commissions to zero, improved tourism, and promoted financial inclusion.
Bitcoin seems alien to Salvadorans, with only 20 per cent of 1,800 Salvadoran households using it for transactions. Even after spending the US$30 in free credit the government provides to promote its use, only 20 per cent of Salvadorans use the Chivo app.
The sources for this piece include an article in Reuters.