Over a year ago, El Salvador made history when it declared bitcoin legal tender. This meant that many companies throughout the region were required to accept crypto payments alongside the U.S. dollar, which the country had long been dependent on, but has everything worked out in the nation’s favor?
El Salvador and Bitcoin… Has It Worked?
With about 16 months under its belt of using bitcoin as real, actual money, it appears El Salvador has some relatively mixed results to show. Not all these results have come from bad money management or poor financial regulations. Rather, bitcoin is very volatile and speculative, and thus a lot of the poor results that have occurred within the nation’s borders stem from the unpredictability of the currency.
But there are people living within the country that don’t feel bitcoin has done anything for them or their region’s economy. One of those people is Edgardo Acevedo, who believes that not much has really happened from El Salvador accepting BTC. He stated in a recent interview:
I don’t think anything has changed, except that the country is more recognized than before, but the economic life of Salvadorans remains the same or worse than a few years ago… What has improved is the issue of violence and crime, but economically, I can say that nothing has changed.
El Salvador has encountered a lot of difficulty when trying to implement its newfound crypto agenda. The country faced heavy opposition from institutions like the World Bank, which refused to aid in the country’s plans, claiming that the price of BTC was too unsteady for the coin to be dealt with seriously.
At the time of writing, bitcoin use in El Salvador has fallen by roughly 60 percent, no doubt a testament to the poor performance the coin has exhibited throughout the 2022 year. It has indeed been a rough time for everyone’s favorite digital currency. Just one year ago, the world’s primary crypto asset was trading at a new all-time high of about $68,000 per unit. Now, however, the currency is struggling to maintain a position in the low $19K range.
Rachel Ziemba – founder of Ziemba Insights – explained that the government of El Salvador is still claiming the bitcoin experiment to be a success despite the lack of noticeable differences made in the territory’s economic operations. She said:
The government claims the developments [are] a success, but most local commentators and international watchers are underwhelmed.
Not Everyone’s Pleased
Laura Andrade – director of the Universidad Centroamericana – also threw her two cents into the mix, claiming the project really hasn’t done much in the long run. She mentioned:
Bitcoin’s first year in effect has transcended from a commercial expectation to an irrelevant topic for traders. The foregoing is evidence that this cryptocurrency never had penetration in national commerce.
