September 29, 2022

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Bukele’s El Salvador Bitcoin gamble does not appear to be paying off after six months

El Salvador became the world’s first country to accept Bitcoin as legal tender in September 2021, which would have led to some excitement. However, just six months later, it would seem that that excitement has since diminished, at least for some.

There have been a number of challenges that have needed to be overcome in regard to the implementation of virtual currency within the Latin American country, and despite some having been able to get over the vast majority of them, it seems that many have actually decided to give up and go back to the cash system that was once in place.

Some have complained that there are problems regarding accessibility to a Bitcoin ATM, whilst others have complained that the government’s helpline was far too slow in helping to deal with technical problems that arose. There are people that have complained about its price volatility, whilst others have even suggested that they lost out on money because of technical glitches that they never managed to get assistance to solve.

A number of businesses on “Bitcoin Beach”, which was a strip on the El Salvador coast that became known as a mecca for crypto disciples, have also decided that it was best to revert to cash once again, especially as they found that they were actually losing out on money.

Nayib Bukele continues to double down

President Nayib Bukele continues to double down on Bitcoin, with news regarding the opening of an online crypto casino via the Metaverse. Known as the Astro Casino, it is a joint venture of the company Astro Babies and the El Salvador Government that will possess all of the traditional features including a gaming floor, bar, lobby, and terrace which players can go and visit either physically or via a virtual reality headset.

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However, despite his decision to continue to double down on it, there would need to be some concern about the adoption rates that have been reported. According to the government, a report that they endorsed suggested that at least 4 million users – almost the entire population – were verified as authentic users of its wallet over a period of time prior to January. A report in March by the Chamber of Commerce and Industry of El Salvador, though, had found that 86% of the businesses that had been contacted as part of a survey had never taken a transaction that had involved the use of Bitcoin.

It has been suggested that there have been a number of technical issues to have arisen since it was made legal tender, whilst relations within the government are now tense given the decentralized nature of crypto and the authoritarian style of the El Salvadoran government.

Naylib Bukele has since been cited as an individual who is thought to be trying to address the administration’s economic troubles, whilst also boosting his own public image at the same time.

Cash still remains the No. 1 legal form of tender

As mentioned, cash still seems to be the go-to form of tender for much of the population. This could be due to the fact that around 70% of the entire country is unbanked, with some suggesting that the move to Bitcoin leaves those without access to a smartphone or to the internet behind. This would be a huge problem to try and overcome as El Salvador is thought to have had almost half of its population offline as recently as 2019.

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Many citizens were found to be clueless regarding crypto, whilst others continued to complain of technical issues that they had experienced when using the Chivo app. Others cited that there were ideological issues, with it being no different from having a bank account.

Despite all of the issues to have been faced, including the fact that El Salvador has been shut out of international capital markets by the International Monetary Fund due to its Bitcoin Law, Bukele remains as bullish as ever before.

He regularly boasts on Twitter about purchasing more Bitcoin using government funds, with it understood that over 1,000 bitcoins have been acquired thus far.

Nonetheless, it does not appear to have had much of an influence on the people of the country he governs, with some still insisting that cash is best when it comes down to being paid.