Weak Bitcoin adoption in El Salvador disappoints the President

Nayib Bukele, Präsident von El Salvador, gut erkennbar an den rot-orangefarbenen Laseraugen.

El Salvador’s head of state, Nayib Bukele, provides an interim assessment of his Bitcoin policy in an interview. Not everything went as he had wished – but overall, the results are strong. El Salvador has played its cards well.

To listen:

El Salvador is well-known in the Bitcoin scene as the country that made Bitcoin legal tender in 2021. Since then, the Bitcoin community has been waiting for something to happen; they pilgrimage to El Salvador to see what it’s like to pay with Bitcoin everywhere – and are regularly disappointed by how indifferent most Salvadorans are to Bitcoin.

However, President Nayib Bukele continues to stick to his Bitcoin strategy. In a detailed interview with Time Magazine, he also provides an interim assessment of Bitcoin.

„We have never forced anyone to use it“

Asked whether Bitcoin has been a success in El Salvador, Bukele replies, “Yes and no. Bitcoin has not experienced the widespread adoption we had hoped for. While many Salvadorans and the majority of large companies in the country – you can pay with Bitcoin at McDonald’s, supermarkets, and hotels – the adoption among people remains below expectations.”

This clearly shows what is sometimes mentioned, often disputed, and denied in the Bitcoin community. Most people have little use for Bitcoin unless there is a necessity.

However, Bukele does not blame Bitcoin itself for the disappointing adoption. Instead, he attributes it to the fact that its usage is voluntary: “We have never forced anyone to use it. Bitcoin is an option, and those” – here the president becomes very clear about the real issue – “who chose to use it have benefited from the price increase.”

Bitcoin is less about being a medium of exchange and more about being a store of value. Almost everyone here knows it, but there was hope that it would somehow be different in El Salvador. „Those who saved in Bitcoin when we started,“ Bukele explains, „have made a lot of money; it’s good that they have these earnings. Those who didn’t use it haven’t had such earnings. If they use it today, they might have such earnings in the future. If not – it’s a free country.”

Not least, the state itself has benefited from Bitcoin. According to Bukele, the country has invested 135 million dollars in Bitcoin. “Today we have 400 million in Bitcoin, just in public wallets.”

„It has only brought us advantages“

Despite everything, the most widely used currency in El Salvador remains the dollar. Bukele seems a bit sad about this: “I think it could have gone better, but there is still plenty of time to make improvements.“ But above all, „it has not brought us anything negative – on the contrary. In the end, it’s only positive.”

Once again, Bukele hits the point that has been evident in the Bitcoin scene for a while: “It brought us investments and tourism.” As the first country to make Bitcoin legal tender, El Salvador has received more attention than a country of its modest size on the other side of the world usually gets. Without Bitcoin, many who now love El Salvador would never have thought to visit.

Certainly, there has also been criticism and intense, not always pleasant, discussions with international institutions. But even the International Monetary Fund (IMF) has partly retracted its critique of the Bitcoin strategy.

No compulsion, no disadvantage

All in all, it can be noted what making Bitcoin legal tender has brought after three years in El Salvador. The strategy worked, albeit differently than expected.

In everyday transactions, the significance remained moderate. It may occasionally be used, but Bitcoin hasn’t visibly gained ground over the dollar in three years.

However, Bitcoin was helpful for those who accepted and kept Bitcoins – including the state. They could multiply their values, which is a big advantage for the country.

Above all, the Bitcoin strategy has made El Salvador famous. This boosts tourism, such as through the annual pilgrimages of the Bitcoin community. Moreover, the country has established itself as an innovative Fintech nation, making it attractive for foreign investments.

More than anything, it holds true what many do not understand, who have not thought through the concepts of coercion and voluntariness: It has brought a lot without costing anything. No one, absolutely no one, loses when people are given one more option to choose from.