'El Salvador Had a Bitcoin Revolution. Hardly Anybody Showed Up'

It's the one-year anniversary of El Salvador's adopting Bitcoin as a legal tender, so Bloomberg follows up, finding a country where "Adoption has moved slowly, and steep declines in Bitcoin's price from those lofty levels last fall have dampened the early euphoria that swept across the nation." "Bitcoin hasn't replaced El Salvador's hard currency, the U.S. dollar — it's not even close — but it also hasn't brought the financial ruin that some warned of either. Or not yet anyway." "No one really talks about Bitcoin here anymore. It's kind of been forgotten," said former El Salvador central bank chief Carlos Acevedo. "I don't know if you'd call that a failure, but it certainly hasn't been a success...." As part of the rollout, Salvadorans were offered government-issued digital wallets preloaded with $30 worth of Bitcoin to help kick things off. Under the law, taxes can be paid in Bitcoin and businesses should accept it as a form of payment, unless they are technologically unable to do so. But the coin's volatility has spooked users, and cryptocurrency has seen broader acceptance in countries with poor payment networks or strict currency controls, such as Argentina, Venezuela and Cuba, Acevedo said. "In El Salvador we have a good payments network, so why transfer money with cryptocurrency?" he said. Most Salvadorans haven't poured large amounts of money into Bitcoin, saving many from the recent bear market, Acevedo said. The same can't be said of the government itself, which started purchasing the token last year in the run-up to its launch as legal tender and has continued to add to its stockpile, conspicuously "buying the dip" during periods when Bitcoin declined. The result? It's sitting on losses. [Later the article points out "The government's 2,381 Bitcoin bought with public funds are worth $47.2 million at current prices, less than half what the administration paid for them."] A series of recent surveys found that only a relatively small minority of respondents continue to use digital wallets and few businesses have registered transactions in Bitcoin. And the central bank says only 2% of remittances have been sent via cryptocurrency wallets. The government is still claiming victory, however. Bitcoin has attracted foreign investment and tourism and increased financial access to a largely unbanked population, according to Finance Minister Alejandro Zelaya. The government says its digital wallet, Chivo, has more than 4 million users. Tourism is on pace to surpass pre-pandemic levels this year and the central bank says 59 cryptocurrency and blockchain companies have registered offices in El Salvador. Other observations from Bloomberg: While El Salvador's president remains popular, a May poll by a local university found 71.1% of respondents said the Bitcoin law didn't improve their family's finances.... "If you go to any market in El Salvador, you're more likely to receive an insult than be able to purchase something in Bitcoin," said the director of the university's public opinion institute. "It's not a part of people's daily routine." The IMF "has held off on approving a $1.3 billion program for the country citing risks from Bitcoin." Plans are still on for a Bitcoin-backed "volcano token".

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