El Salvador’s bitcoin experiment, one year later

It's been a little over a year since El Salvador became the first country to officially adopt bitcoin as legal tender. So put on some overalls, grab an oil rag, and sit with us as we pop the hood. Let's see how it's going.

🪙 Background: Over 70% of the country's citizens don't have a bank account. And President Nayib Bukele, who once admitted he buys crypto on his phone while in the nude (and whose Twitter bio previously read “the world’s coolest dictator”), championed bitcoin as a way to bank the bankless.

To help facilitate national adoption, El Salvador launched a virtual wallet called “chivo” – Salvadoran slang for “cool” – pre-loaded with $30 in crypto.

• In theory, the wallet also provided a way for citizens to process remittances, aka payments sent to family and friends back home by emigrants, a category accounting for more than a quarter of the country’s GDP.

🌎 In the real world… The results weren’t as rosy as the initial pitch, in large part due to a lack of adoption. While 60% of the population has used the chivo app, only 20% continued to use it after spending the $30 gift. More than three-quarters of the population never used crypto in 2022, per a recent poll, and “less than two percent" of remittances have been made using bitcoin since it was designated legal tender, according to data from the Salvadoran Central Bank released in early September.

📸 Big picture: The price of bitcoin has dropped ~60% since last September, when El Salvador’s move became official. Which may be part of why citizens are calling it a loss – according to a recent poll, 77% consider the country’s crypto initiative "to have been a failure."