The El Salvadoran parliamentary assembly approved the Bitcoin Law on June 9, 2021, with 62 of the country’s 84 deputies voting in favour. The administration subsequently declared that $150 million had been put aside as a fund to support the law that had been enacted. Officials also stated that they will pay $30 in BTC to anybody who signs up for the “Chivo” electronic wallet.
First revealed in a video by El Salvadoran President Nayib Bukele during the 2021 Bitcoin Conference in Miami, the plan calls for the country to pass legislation making Bitcoin legal tender.
According to Bukele, the goal of the action was to make it simpler for its citizens who live overseas to remit money to their family members back home. However, more than a year after the country’s historic acceptance of the cryptocurrency, things didn’t go as the El Salvadoran authorities had anticipated.
Around 77% of El Salvadorans, as per published research by the University of Central America (UCA), think that the country’s decision to accept Bitcoin as legal cash was a colossal failure. Additionally, 75.6% of the respondents admitted they haven’t utilised cryptocurrency this year. Such an outcome is unexpected given the efforts the Bukele government made to promote the virtual asset.
Regarding the alleged advantage of Bitcoin making transfers easier to send, a study from the Salvadoran Central Bank in September 2022 showed that only 2% of remittances utilised digital currency.
A whopping 77% of the populace disagreed with the notion that the government is spending tax dollars to amass Bitcoin, stating that this practice must stop right away.
El Salvador’s government has suffered significant losses as a result of the cryptocurrency market’s volatility, and it is currently battling to stage a comeback bull run. Bukele made the right decision when he decided to invest in Bitcoin last year, as the digital currency eventually reached an all-time high of almost $69,000 in November. At the time of writing, the price of one bitcoin is $19,153, a decrease of more than 70%.
However, according to the World Travel Organization, El Salvador’s Bitcoin tourism increased significantly in the first half of 2022. El Salvador received 1.1 million visitors this year, up 82.8% from last year, according to government statistics. The country’s finance minister, Alejandro Zelaya, recently said that the introduction of Bitcoin had raised levels of financial inclusion by banking the unbanked (in order to connect to the Chivo wallet a person needs to have an existing bank account.)
Bukele is optimistic despite calls from international organisations like the World Bank and the International Monetary Fund (IMF) to overturn the highly divisive Bitcoin Law. Their plan has yet to be successful, he says. The administration is investing its time and resources into achieving its aim of making the country a global hub for crypto rather than concentrating on the unfavourable response the law has received from the general public.