There are several factors that could explain this low uptake, including lack of familiarity and understanding of cryptocurrencies, concerns about security and safety, and the fact that Bitcoin’s volatility makes it an unreliable form of money.
The low levels of Bitcoin adoption in El Salvador have significant implications, not only for the country’s financial sector but also for its broader economy. The findings are striking, as President Nayib Bukele has been making a concerted push to introduce Bitcoin into the nation’s financial system since it was adopted as legal tender back in September 2021.
Despite the government’s efforts to boost the use of Bitcoin by offering incentives like tax breaks and providing easy access to Bitcoin through a mobile app called “Chiva,” it appears that the vast majority of Salvadorans are not taking up the offer.
The adoption of Bitcoin as legal tender by El Salvador has proven to be a controversial move, as new survey data indicates that only about 10% of the country’s citizens are using Bitcoin to make transactions. It remains to be seen whether President Bukele will take any action to address the low levels of Bitcoin adoption, or whether he will abandon the cryptocurrency as a centerpiece of his economic policy.
One thing is clear, however: the experiment with Bitcoin has not been as successful as the government had hoped, and it will be interesting to see what lessons can be learned from it.
The government had hoped that embracing Bitcoin would help to modernize El Salvador’s financial infrastructure, boost trade, and boost foreign investment.
However, it seems that this is not happening as intended, and there are even concerns that the move could be damaging El Salvador’s reputation as a stable and predictable destination for foreign investment.
