El Salvador was the first nation to legalize bitcoin. In 2021, Both United States Dollars and bitcoin became legal tender by the government. President Bukele pledged to raise billions of dollars using tokenized blockchain bonds and avoid traditional financial markets. He would produce geothermal energy to power bitcoin miners, construct a “bitcoin city” in the forest, and purchase $500 million worth of bitcoin. However, the El Salvador experiment showed it is not that easy to adapt bitcoin for daily exchanges.
In 2022, when the craze was at its height, Just 5% of tax payments were made in cryptocurrency according to a CID-Gallup study. Only 5% of businesses also accepted bitcoin. After a change to the law in January 2025, taxes are no longer payable in bitcoin, and its acceptance in the private sector is voluntary. People continued to have a significant preference for cash and credit cards, recent figures are probably considerably lower.
According to Moody’s rating agency estimations A total of $375 million was spent on the Chivo rollout, reduced transaction costs, bitcoin ATMs, and other measures to make bitcoin legal money. That is more than the earnings from bitcoin assets, which are still subject to fluctuation. Additionally, Mr. Bukele’s cryptocurrency experiment kept El Salvador’s risk premium high and his nation on the verge of default.
In any case, president Bukele frequently brags about El Salvador’s 6,091 bitcoin holdings, which are worth over $500 million. However, adapting bitcoin as a legal tender seems to be a failed project in El Salvador.
Source: Economist
