While most countries were still debating the merits of cryptocurrency, El Salvador boldly dove headfirst into the Bitcoin pool. In June 2021, President Bukele made the startling announcement that would transform his nation into a crypto laboratory. Bitcoin became legal tender, and the government went shopping – snatching up 400 BTC worth $20.9 million. Talk about commitment. The decision came during a strong bull market phase, when investor confidence was particularly high.
The early days were a whirlwind of optimism. The government launched Chivo wallet with a $30 sign-up bonus – fundamentally paying people to join the crypto revolution. A whopping 78% of households downloaded the wallet. Initial surveys revealed that 90% of Salvadorans lacked understanding of the cryptocurrency they were adopting. Success, right? Well, not exactly. Usage rates tell a different story, plummeting from 25.7% in 2021 to a measly 8.1% in 2024. Turns out, free money only gets you so far.
But here’s the plot twist: while everyday Salvadorans weren’t exactly embracing Bitcoin for their morning coffee runs (92% reported not using it in 2024), the government’s investment strategy wasn’t looking too shabby. By March 2024, their Bitcoin holdings sat at a comfortable 50% profit, with 6,150 BTC valued at around $600 million. Not bad for a country ranked 106th in the global crypto adoption index. President Bukele has since admitted that the Bitcoin experiment struggles despite some financial gains.
The experiment has had some unexpected perks. Tourism is booming, with 3.9 million visitors in 2024 – a 22% jump from the previous year. El Zonte businesses reported 30% increases in activity. The country’s crypto-friendly reputation has attracted foreign investment, though the World Bank wasn’t impressed, rejecting assistance requests over transparency concerns.
Reality check came in 2024 when the IMF stepped in with a $1.4 billion deal that required scaling back Bitcoin policies.
Still, El Salvador’s crypto dreams aren’t completely dead – just slightly more grounded. The government maintains its Bitcoin Office certification program and continues to hold its position as the world’s first nation to embrace Bitcoin as legal tender. Sometimes being first means learning the hard lessons for everyone else.
