El Salvador made history by becoming the first nation to embrace Bitcoin as a legal tender more than two years ago.
Although the country’s financial outlook has seen positive developments, a recent study carried out by José Simeón Cañas Central American University unveiled a mixed sentiment regarding the correlation between the adoption of Bitcoin and perceived improvements in personal well-being.
Mixed Feelings
According to the survey, 12% of the local population in El Salvador used Bitcoin at least once to pay for goods and services in 2023. This marks a significant decrease from 2022, when the same university reported that 24.4% of Salvadorans had engaged in transactions using Bitcoin.
The decline in numbers raised questions about the sustainability and widespread acceptance of the premier crypto asset in everyday transactions.
Among those who utilized Bitcoin for transactions, nearly half – 49.7% – made purchases using the crypto asset only one to three times. On the other end of the spectrum, 20% of respondents used Bitcoin for 10 transactions or more, indicating a notable difference in the frequency of crypto usage.
Meanwhile, Groceries topped the list, with 22.9% of respondents using Bitcoin for grocery shopping, followed closely by supermarkets at 20.9%. A surprising 15% of respondents reported using Bitcoin for transactions at veterinary clinics, highlighting the diverse range of businesses incorporating the asset into their payment systems.
The number of respondents who felt that their family’s life had improved during the past year, coinciding with Bitcoin becoming legal tender, increased from 3% in 2022 to 6.8% in 2023. While this suggests a positive association, it is important to note that the majority of respondents – 93.2% – did not attribute any improvements in their lives to Bitcoin usage.
Contrary to the positive correlation between Bitcoin adoption and personal well-being, the survey reveals a disconnect between crypto use and perceptions of the overall economic situation in El Salvador. Only 0.5% of respondents believe Bitcoin has played a role in the country’s economic improvement. Instead, more than a third of respondents – 34.3% – attribute the perceived economic improvement to a decline in crime rates – 24.3%.
El Salvador’s Advancements Thus Far
On June 9th, 2021, El Salvador’s government officially endorsed legislation in the official gazette, designating the digital currency Bitcoin as legal tender within the nation. The legislation became effective on September 7th, 2021, making El Salvador the world’s first country to embrace Bitcoin as legal tender formally.
This decision faced considerable criticism from mainstream media and traditional financial institutions, a sentiment that amplified during the subsequent bear market.
However, El Salvador has made significant strides since then. The country’s investment in Bitcoin proved lucrative as its portfolio turned profitable amidst the bear market, reaching $42,000 in December 2023.
Taking a step further, the government collaborated with stablecoin issuer Tether to introduce the “Adopting El Salvador Freedom Visa Program.” Applicants are required to submit a non-refundable deposit of $999 in either Bitcoin or USDT, and successful applicants undergo a Know Your Customer (KYC) verification process.
In another development, the Digital Assets Commission granted approval for El Salvador’s Bitcoin-backed bonds, known as Volcano Bonds. According to the National Bitcoin Office (ONBTC), these bonds will be accessible on Bitfinex Securities, a regulated segment of the cryptocurrency exchange Bitfinex.
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