According to recent government figures, the South American nation of El Salvador has seen less than 2% of its remittance in cryptocurrency. Critics of the country’s Bitcoin adoption noted that this is proof that the plan has failed to gain ground.
Is El Salvador’s Bitcoin Adoption a Failure?
Based on the country’s Central Reserve Bank (BCR) figures, recent remittances into El Salvador by individuals and organizations hit the $588 million mark in the first month of the year. The figures show a 6.38% increase compared to the same period in 2022.
However, the central bank noted that cryptocurrency payments represent just 1.63% of the country’s total remittances. The overall equivalent of crypto sent to El Salvador in fiat is worth $126.7 million in January 2023.
The recent figure shows a slight decline from last year’s data, with the BCR revealing that between September 2021 and June 2022, the total amount of remittances sent to the country in crypto was $6.4 billion representing 1.8% of total remittances.
El Salvador was in the spotlight in 2021 after President Nayib Bukele announced that the country had adopted Bitcoin as a legal tender. As a result, many transactions were carried out using Bitcoin, with the president disclosing that the government would ramp up its Bitcoin reserves.
Also read:Overseas remittances into the country sent in by Salvadorans have been a significant source of revenue for the country. The government envisioned that adopting Bitcoin as a legal tender would provide more options and conveniences for overseas-based citizens sending money into the country.
As a way of increasing adoption for its Bitcoin initiative, authorities launched a BTC app (Chivo app) to facilitate Bitcoin remittances into the country. However, last year’s data shows that only two in ten residents who downloaded the app are using it.
Close to half a million households in the country received remittances from their relatives based abroad in the same period the government launched the BTC app, as revealed by media reports.
Critics Slam Bitcoin Policy
Skeptics of the country’s Bitcoin initiative have pointed out that only a few Salvadorans use Bitcoin, with a handful of residents aware of its use as a settlement medium. So far, El Salvador has invested $400 million into the Bitcoin policy since its adoption, with about $100 million going into the purchase of Bitcoin by the government.
According to the Oregon Blockchain Group, the value of the nation’s BTC investments are down by more than 40%. Still, the on-chain platform noted that less than half of the population had used the Chivo app since its inception.
As critics continue explaining why El Salvador’s Bitcoin adoption was a failure, the country’s finance minister insisted that Salvadorans use BTC daily. With El Salvador battling long-standing economic challenges, finance experts see the use of BTC as another failed policy from the government to ease these challenges.
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