Three years after El Salvador became the first country to adopt Bitcoin as legal tender, the bold experiment has yet to deliver meaningful benefits to the vast majority of its population, raising questions about the effectiveness of President Nayib Bukele’s cryptocurrency strategy.
National reserve grows but economic impact remains elusive
El Salvador’s government has accumulated a Bitcoin reserve reportedly worth over $300 million, boosted in part by recent price increases. Yet despite this digital windfall, there is little sign that it has improved living standards for ordinary Salvadorans. Public services remain underfunded, inflation pressures persist, and remittance fees — a major focus of the initial Bitcoin pitch — have not meaningfully declined for most families. Critics argue that the gains are largely symbolic and do little to address the country’s underlying structural challenges.
Citizens slow to adopt cryptocurrency in daily life
While the government launched the Chivo digital wallet in 2021 and offered monetary incentives to boost adoption, usage has been limited. Most Salvadorans continue to rely on the US dollar for daily transactions, citing concerns over Bitcoin’s volatility, lack of trust in digital systems, and limited merchant acceptance. A 2024 study by the Central American University found that less than 15% of businesses regularly accept Bitcoin and fewer than 5% of remittances are conducted using the cryptocurrency. Many users who downloaded the wallet during its launch year have since abandoned it.
Infrastructure and transparency gaps remain
Bukele’s administration has promoted Bitcoin as a tool for innovation and independence, but critics highlight persistent transparency issues. The exact details of state-held crypto wallets, transaction timing, and third-party custodians remain undisclosed. While the government has launched plans for a “Bitcoin City” and a volcano-powered mining operation, those projects have struggled to gain traction and remain largely conceptual. Meanwhile, basic infrastructure investment has lagged behind promises, particularly in rural areas.
Wealth effect fails to trickle down
Although the president claims El Salvador is profiting from its Bitcoin holdings, the returns have not translated into direct social programmes or income support. Public sector unions report stagnant wages, and the national debt remains high, forcing the government to secure financing from traditional lenders. Economists note that even with Bitcoin’s recent resurgence, El Salvador’s economic outlook depends far more on external factors such as tourism, remittances, and US monetary policy than on digital assets.
A polarised legacy for Bukele’s flagship policy
Supporters of Bukele argue that El Salvador has positioned itself as a pioneer in digital finance, attracting global attention and new investor interest. However, that narrative is sharply contested by many citizens who see little benefit from the shift. The Bitcoin experiment, for now, appears to have served more as a branding exercise than a solution to poverty or economic exclusion. As Bukele begins his second term, the government faces growing pressure to refocus on basic needs rather than speculative ventures.
REFH – Newshub, 26 July 2025
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