[TL; DR]
El Salvador president Nayib Bukele said despite the low bitcoin adoption rate the country has gained much from the project.
Since 2021 El Salvador has mined more than 474 bitcoin.
El Salvador has embarked on a bitcoin education program to increase the adoption rate.
Introduction
This is the fourth year after El Salvador adopted bitcoin as a legal tender. It uses various strategies to encourage its citizens to adopt BTC in order to prop up its struggling economy. El Salvador President Nayib Bukele believes that the adoption of bitcoin as a legal tender has assisted the country in poverty alleviation. This assessment will focus on El Salvador’s progress in its bitcoin project.
Salvadoran President Admission: Bitcoin Adoption Very Low
El Salvador President, Nayib Bukele recently admitted that the bitcoin adoption rate in the country has been lower than expected. According to him, the results of the country’s monetary experiment with bitcoin have been mixed. In an interview with Time Bukele said, “Bitcoin hasn't had the widespread adoption we hoped for. Many Salvadorans use it; the majority of large businesses in the country have it. You can go to a McDonald's, a supermarket, or a hotel and pay with Bitcoin. It hasn’t had the adoption we expected.”
Despite the low adoption rate, Bukele said that there are many positive aspects of using bitcoin as a legal tender. He explained: “Moreover, those who saved in Bitcoin when we launched it must have made a lot of money. Thank God for that. It's good that people have those earnings. Those who decided not to use it did not have those gains. If they use it now, they will probably have gains in the future.”
A number of reasons could have contributed to the low bitcoin adoption in El Salvador. However, the president said that the fact that people have a choice to use it or not contributed much to the low bitcoin usage in the country. He stated, “The positive aspect is that it is voluntary; we have never forced anyone to adopt it. We offered it as an option, and those who chose to use it have benefited from the rise in Bitcoin value.”
He added, “For me, it is an option we have given to Salvadorans. I'm not going to say it's the currency of the future, but there's a lot of future in that currency. I'm not the only one saying it. I wasn't among the first, but we were still few in 2021.”
Nayib’s Bitcoin Vision: 4 Years Running with Bitcoin as a Legal Tender
El Salvador’s journey with bitcoin started in 2021 when the country passed the bitcoin law. With this law businesses and individuals have the right and/or obligation to express prices of goods and services in the country in bitcoin. This means that the sellers can receive payments in bitcoin while the buyers can choose to pay using the digital currency.
The bitcoin law, which was passed on 7 September 2021, made El Salvador the first country to use Bitcoin as a legal tender. According to the leaders, adopting bitcoin as a legal tender would lead to financial inclusion, reduce dependence on the United States dollar and digitize the economy. To promote the use of bitcoin the country introduced its digital wallet called Chivo. Also, anyone who downloaded the wallet would receive free $30. More interestingly, people who use Chivo for transactions do not pay gas fees.
Assessment of Bitcoin’s Contribution to El Salvador
According to President Bukele, the adoption of bitcoin has had a great economic impact on the country. Also, bitcoin adoption has helped to improve the image of the country. Further to this, there was a rise in foreign direct investment as many crypto related firms opened businesses in the country. For example, several bitcoin firms have opened offices in El Salvador. In addition, the country has been receiving many tourists who have been attracted by the developments in the bitcoin sector such as its BTC mining project.
Bitcoin has also facilitated financial remittances. This is because Salvadorans in other countries are able to send bitcoin to their relatives in the country. Such a development assists over 70% of El Salvador’s citizens without bank accounts to access financial services. Since many Salvadorans live outside the country they can easily remit bitcoin home. About 23% of the country’s GDP is contributed by Salvadorans who live in other countries.
It is also essential to realize that bitcoin is treated as money in El Salvador. This means that it is not taxed although people invest in it. In fact, many people hold it as an investment asset since its value can appreciate over time.
In El Salvador bitcoin has also contributed to technological infrastructure development. First, the introduction of Chivo and bitcoin ATMs has helped to digitize and modernize the country. Second, the country has also developed its bitcoin mining infrastructure. For example, the country has installed 300 processors to "mine bitcoin. This has contributed to the growth of El Salvador and bitcoin sector in general. Bitcoin mining is also helping to alleviate poverty in the country.
Read also: Top 10 Countries Leading Blockchain Revolution in 2024
Boosting Bitcoin Adoption in El Salvador: Tech and Education Efforts
The country’s current focus is to increase cryptocurrency adoption through education and awareness campaigns. Recently, the government launched a bitcoin education and awareness program where it aims to train more than 800,000 civil servants. With this program, every civil servant will know how bitcoin works and how to use it. As a result, they will be able to educate others about the cryptocurrency market and blockchain technology.
Second, the government is in the process of developing relevant content for schools. This will ensure that many young people around the country will know about cryptocurrencies and their benefit to the economy. This will increase the adoption of cryptocurrencies including bitcoin in the future.
Future outlook of Bitcoin in El Salvador - Prospects and Plans
Apart from the education and awareness programs El Salvador has several initiatives to increase the adoption and appreciation of bitcoin and other cryptocurrencies in the country. First, it plans to create Bitcoin City, a town where the country will mine the cryptocurrency using volcano geothermal energy. Already, the country is mining bitcoin which is now part of its wealth. So far, it has mined more than 474 bitcoin and holds over 5, 85775 BTC.
Despite the fact that the bitcoin adoption rate is lower than expected President Bukele believes that the country has done fairly well in this project. He commented, “I wouldn't consider it a resounding success. Still, I do believe that the positive outcomes outweigh the negative, and the issues that have been highlighted are relatively minor.”
He continued, “Even the International Monetary Fund itself stated in its report last year, "The risks of Bitcoin in El Salvador have not materialized," meaning the risks they anticipated did not come to pass. We have seen nothing but benefits.”
Conclusion
El Salvador became the first country to adopt bitcoin as a legal tender in 2021. Since that time it has been acquiring more BTC. Apart from buying it, the country has established a mining project. To overcome the limitation of low adoption El Salvador has introduced an education and awareness campaign targeted at civil servants and students.
FAQs about Bitcoin El Salvador
How is El Salvador doing with bitcoin?
The adoption rate of bitcoin in El Salvador is still very low. However the country holds over 5, 85775 BTC and it also mines some.
How much bitcoin is El Salvador worth?
Currently, El Salvador holds more than 5, 85775 BTC. It started acquiring bitcoin in 2021 after it introduced the bitcoin law.
What is the digital asset law in El Salvador?
The digital asset law is the regulation which El Salvador introduced in 2021 that made bitcoin a legal tender. As a result, buyers can make payments using bitcoin and sellers can accept it as a medium of exchange.