El Salvador's Bitcoin Experiment Ends in Disaster with 99.8% Decline

El Salvador's adoption of Bitcoin as legal tender has had a surprising outcome. In 2021, the government made Bitcoin a valid form of payment in the country, hoping it would boost economic development and attract international investors.

At first, there was some enthusiasm among citizens. A survey by the Central American University found that 56% of respondents downloaded the government wallet, and 36% used Bitcoin at least once monthly. Additionally, 14% of businesses conducted Bitcoin-related transactions, and it accounted for 2% of remittance payments.

However, since then, usage has sharply declined. In fact, according to Bit Faced, Bitcoin usage in El Salvador has fallen by more than 99.8%. Jon Attack, a Bitcoin Core contributor, even reported that major restaurants accepting BTC had gone over a month without receiving any payments.

The reason for this decline is largely attributed to changing sentiment among investors and citizens. Many now view Bitcoin as a long-term holding rather than a payment method. The HODL mindset has reduced merchant payment activity, and government policy changes have added further pressure. For instance, the IMF pushed El Salvador to remove mandatory Bitcoin acceptance for merchants as part of a $1.4 billion loan agreement.