Two years after El Salvador adopted Bitcoin as legal tender, adoption remains low as citizens question the cryptocurrency’s benefits, according to former Ethereum core developer Lane Rettig.
In a recent talk at EthCC 2023, Rettig provided an update on the Bitcoin experiment in El Salvador that he first discussed in 2021. After visiting the country twice since the law was passed, Rettig found that Bitcoin adoption was lagging despite considerable promotion by the government.
Residents of El Salvador are not impressed with Bitcoin
“Very few of them use Bitcoin on a daily basis,” Rettig said, referring to the 4 million Salvadorans who downloaded the state-sponsored Chivo wallet for a $30 Bitcoin bonus.
Less than 2% of remittances flow through Bitcoin, according to Rettig, even after the government rolled out Chivo ATMs across the United States. Research also shows that the use of digital payments and Bitcoin in El Salvador is low and decreasing over time.
“Most people don’t feel like Bitcoin benefits them,” Rettig said, referring to a recent essay by a Salvador resident. “It is largely not an accepted medium of exchange in El Salvador, despite promotion from the government.”
Bitcoin adjacent improvements to El Salvador
However, Rettig stated that the Bitcoin law has significantly reduced crime, which he called a “huge improvement in quality of life.” Recent surveys show that more than 80% of Salvadorans believe that crime has fallen under Bukele’s rule. Citizens say they feel safer when they go out at night for the first time.
Bitcoin ATMs have increased dramatically from just two in 2021 to over 200 nationwide. El Salvador now offers coverage that rivals major world cities, with ATMs even in remote villages. The fees at these ATMs are negligible, according to Rettig’s experience.
Another positive development is that El Salvador recently passed a digital asset law to provide a legal framework for the creation of Bitcoin-based organizations. This has attracted crypto entrepreneurs to invest in mining and other business ventures in the country.
Concerns about human rights
However, concerns about democracy and human rights remain under the increasingly authoritarian regime of President Nayib Bukele. Bukele’s government reportedly bribed gangs and built one of the world’s largest prisons to curb violence, imprisoning nearly 2% of the adult population without due process.
Bukele also abolished presidential term limits, overriding the Supreme Court. Critics worry that he is sliding the country toward dictatorship while failing to deliver economic benefits to ordinary citizens through Bitcoin.
While optimistic about Bitcoin’s potential, Rettig stressed that more work is needed to build trust. “Convincing people to trust and use it again requires a lot of work to be done there,” he said. Rettig remains hopeful that El Salvador’s Bitcoin experiment will eventually empower people through financial inclusion.