El Salvador's Bitcoin Experiment Falls Short

Five years have passed since El Salvador became the first country to adopt Bitcoin as legal tender. President Nayib Bukele announced this plan at the Bitcoin conference in Miami on June 5, 2021, with great enthusiasm from the Bitcoin community.

Bukele initially pitched Bitcoin adoption as a way to bank the unbanked, reduce remittance costs, and attract investment to El Salvador. However, Dr. Tobias Boos, a senior scientist at the University of Vienna, claims that this experiment failed to achieve these goals.

Boos' research found that foreign direct investment in Bitcoin did not increase, mass adoption by citizens did not occur, and Bitcoin was not widely used for remittances. In fact, crypto wallets accounted for barely 1% of remittances by 2024, down from a peak of 1.7% in 2020-21.

Boos also found that the Chivo Bitcoin wallet did little to solve the problem of banking access, and that most Salvadorans who adopted Bitcoin were already banked individuals.