One year ago, Bitcoin became legal tender in El Salvador: a watershed moment.
Nayib Bukele, the president of El Salvador, believes the nation was brave to adopt Bitcoin (BTC) as a legal tender. President Bukele made this known in a quoted tweet earlier today.
This thread right here👇🏼 https://t.co/sXb529x8KT
— Nayib Bukele (@nayibbukele) September 8, 2022
It is worth noting that El Salvador was heavily slammed by global financial agencies, including the International Monetary Fund (IMF), for adopting Bitcoin.
Financial reporters also called El Salvador’s Bitcoin adoption a failed experiment. However, El Salvador stood its ground and continued to throw its weight behind the asset class, even when it became rumored that western nations may cut ties with the country.
El Salvador did not only make Bitcoin a legal tender, but the country also splashed over $100 million on the world’s largest cryptocurrency by market capitalization. Unfortunately, El Salvador’s Bitcoin venture has not gone pretty well as expected following the massive decline of the cryptocurrency.
But Bukele shares his views, saying: “El Salvador citizens and government were brave. They know that change won’t happen in a day. It requires time, love, effort, vision, and passion. Patience and discipline drive the progress for the next years, from tech to infrastructure development.
Remember how long it took for any meaningful change to happen in Europe? From tens of years to centuries.
Bitcoin isn’t a magic wand that fixes all the problems but can create an even playing field among nations in terms of agnostic currency. That’s why adopting bitcoin as an option gives El Salvador a first-mover advantage that is extremely rare in history.”
El Salvador’s Bitcoin Adoption
Introducing Bitcoin as a legal tender in El Salvador was a momentous event for the country and the whole cryptocurrency industry. It was the first time a nation recognized Bitcoin as a legitimate form of currency and paved the way for other countries to follow suit.
Moments after Bitcoin was made a legal tender in El Salvador, the price of the top asset skyrocketed, reaching an all-time high of over $69,000. The positive surge in prices only caused more hype around President Bukele’s adoption of Bitcoin, and he soon named himself the “World’s coolest dictator.”
But a year after El Salvador adopted Bitcoin as legal tender, the hype has largely died down. The mass adoption that Bukele’s administration anticipated is yet to happen, and instead, the value of the country’s Bitcoin holdings has declined massively.
Part of the problem was that 70% of El Salvador’s population was unbanked and underbanked when the country adopted BTC. These individuals were largely skeptical of cryptocurrency and were unwilling to put their trust in an asset that was so volatile. Additionally, the continuous crypto winter and current market state made people hesitant to use the coin.
The rollout initially seemed promising, as almost four million wallet downloads were recorded in a few weeks. However, it quickly became apparent that many of these downloads were simply people trying to claim the $30 sign-up bonus.
According to El Salvador’s President Bukele’s tweets, the country has spent $106.3 million on Bitcoin since it was approved as legal tender last year. These holdings are now worth about $45.8 million, representing a 57% loss.
In the end, President Bukele’s grand experiment failed to bring about the mass adoption of bitcoin that he had hoped for. A year later, El Salvador still struggles to convince its citizens to use cryptocurrency.