New Study Reveals How Bitcoin Has Fared In El Salvador As Legal Tender

El Salvador, despite its efforts to promote financial inclusivity and spur economic development by accepting Bitcoin as a legal tender, appears to be encountering difficulties in achieving widespread acceptance of the digital currency. A research survey conducted by a group of economics professors has revealed numerous challenges the country is facing concerning the implementation of Bitcoin. 

Professors Conduct Research On Bitcoin In El Salvador

The research report jointly authored by Yale Economics Assistant Professor David Argente, Economics Professor Diana Van Patten, and Economics Professor at the University of Chicago, Fernando Alvarez, unveils the adoption and overall sentiment toward Bitcoin in the sovereign country. The report highlights the findings of an intensive face-to-face survey conducted on 1,800 households in the sovereign country. 

The research survey investigated the use of El Salvador’s Chivo Wallet within households, examining factors inhibiting the adoption of Bitcoin among firms and residents in the country. Furthermore, a thorough analysis of the blockchain data from the apps was conducted to verify their findings. These analyses provided the economists with valuable insights and a more comprehensive understanding of how Bitcoin is faring in El Salvador. 

The result of the survey indicated a lack of widespread acceptance and trust in Bitcoin among residents. Despite El Salvador President Nayib Bukele’s proclamation of widespread adoption of the Chivo wallet, according to the report, only a small fraction of citizens make use of the country’s Chivo wallet for their digital currency transactions. 

Furthermore, the report revealed that a majority of individuals initially downloaded the Chivo wallet due to hype and the free BTC offered upon its launch. However, subsequent trends showed a decline in the adoption and usage of the digital currency wallet, casting doubt on the potential for increased utilization of Bitcoin and the Chivo wallet in the future. 

BTC price at $42,850 | Source: BTCUSD on Tradingview.com

Key Factors Behind El Salvador’s Waning BTC Adoption

In the research report, it was disclosed that the primary factors inhibiting the adoption of Bitcoin and Chivo wallets in El Salvador were privacy and transparency concerns. 

Globally, millions of people have embraced blockchain technology for its capability to provide anonymity, privacy, and transparency in financial transactions. However, for El Salvadorians, cash offered a greater level of anonymity compared to Bitcoin transactions. 

Additionally, the report disclosed a notable lack of trust among citizens for blockchain technology and digital currencies. A combination of all these factors appears to have impeded the growth and adoption of BTC and the Chivo wallet in El Salvador. 

Even with the attractive features and rewards attached to the Chivo wallet, including a $30 Bitcoin bonus, a gas fee discount, and the absence of transactional fees, a less-than-expected amount of El Salvadorians are actively incorporating Bitcoin or the Chivo wallet into their daily transactions. 

Chart from Tradingview.com