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On June 8th, 2021, The Legislative Assembly of El Salvador passed the Bitcoin Law - effectively making Bitcoin legal tender across the country.
In order to stimulate citizens to use Bitcoin, the El Salvador government gifted all citizens $30 USD in Bitcoin. With over 7 months having passed, I thought it would be interesting to take a look at how the transition to Bitcoin has been going!
- Over 3 million users have now downloaded the Chivo app and merchants across the country accept it as payment. There are now more Bitcoin users than people who own a traditional bank account. Albeit, only 30% of the population has a bank account.
- El Salvador is one of the top countries in the world for remittances. Remittances are now available in Bitcoin - reducing the fees paid for using companies such as Western Union.
- El Salvador has announced plans to use volcanos to mine Bitcoin and derive energy for a 'Bitcoin City'. I'm no scientist, so I can't really comment on the technical feasibility of this idea. However, any idea which uses renewable energy (rather than non-renweable) is a step in the right direction in my opinion, as it reduces the 'Bitcoin uses so much energy' argument put forward by critics and is better for the environment overall.
- There is no public information available on how much Bitcoin El Salvador owns, or when they make their trades. However, it is highly likely the government is currently experiencing a financial loss (on paper), given they began buying in September and have been steadily accumulating since then. Since their buying began, Bitcoin rose to a high of $67,553 USD on November 8th and now stands at $43,207 USD.
- Given the clandestine and secretive nature of El Salvador's Bitcoin acquisition process, opportunities for corruption are rife. With no official public record, the ability for public scrutiny and transparency is severely reduced. The centralized nature of the Chivo app also works against one of Bitcoin's strengths (namely, it's decentralized nature).
- Perhaps most alarmingly, the El Salvador government has failed to do a proper job of educating its citizens on what Bitcoin is, how to use it, and its potential benefits/risks. Many users have not yet logged in to claim their Bitcoin, or worse, have had it stolen through identity theft. Others simply cashed out immediately. The Chivo app remains clunky, and until the entire population have the proper knowledge and accessibility, concerns over full scale adoption will persist.
The Outlook
Ultimately, I'm not as worried about price fluctuations as I am about the population not receiving quality education relating to Bitcoin. You can give a kid a bike, but they can't ride it until you teach them. Hopefully moving forward, El Salvador will increase their community outreach to get Bitcoin into more well-educated hands, while also being more transparent about their own activities too.
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