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This $150 million loss represents approximately 5% of El Salvador's annual GDP.
The IMF loan in 2024 required cutting back on Bitcoin purchases and limiting its role in public finance.
On September 7, 2021, El Salvador did something no country had ever done: it made Bitcoin legal tender alongside the U.S. dollar. President Nayib Bukele called it a revolution - a way to cut out middlemen, help the unbanked, and attract global investment. But three years later, the reality is far more complicated. Bitcoin hasn’t transformed the economy. It’s created confusion, debt, and frustration.
Why Bitcoin? The Promise Behind the Policy
El Salvador’s economy has long been stuck. Over 70% of adults didn’t have a bank account. Remittances - money sent home by Salvadorans living abroad - made up more than 20% of the country’s GDP. Sending that money through Western Union or MoneyGram cost up to 10% in fees. That’s $800 million a year going to intermediaries instead of families. The government’s answer? Bitcoin. By making it legal tender, they claimed Salvadorans could send and receive money instantly, for free, using just a phone. The idea was simple: bypass banks, slash fees, and bring the unbanked into the digital economy. To make it stick, the government launched Chivo, a free wallet app. Download it, and you got $30 in Bitcoin. Use it to pay for gas? You got discounts. Pay taxes in Bitcoin? You could. It sounded like magic. But magic doesn’t scale when the foundation is shaky.The Chivo App: A Promising Start, Then a Bust
Half the country downloaded Chivo in the first month. That’s over 2 million people. But downloads aren’t usage. By early 2022, more than 60% of those who got the free Bitcoin never made another transaction. One in five still hadn’t spent their $30 bonus. Why? Because the app was buggy. Transactions failed. Wallets froze. People didn’t understand how to send Bitcoin. Older users, rural communities, and small shop owners - the very people the policy was meant to help - were left behind. The few who kept using it? Young, tech-savvy, urban men with bank accounts. Not the unbanked. Not the poor. The policy failed its own target audience.Bitcoin Volatility: A National Financial Risk
Bitcoin isn’t stable. In 2021, it hit $68,000. By 2022, it dropped below $20,000. The Salvadoran government bought Bitcoin at high prices, spending $150 million of public money. When prices crashed, those holdings lost value. The country didn’t just lose money - it lost credibility. International credit agencies like Moody’s and S&P warned: holding Bitcoin as a national reserve is reckless. It’s like storing your life savings in a stock that can swing 30% in a day. The IMF called it a threat to macroeconomic stability. And they weren’t wrong. In 2024, El Salvador had to turn to the IMF for a $1.4 billion loan. In exchange, they agreed to scale back Bitcoin’s role. No more public Bitcoin purchases. No more mandatory acceptance. The country still calls Bitcoin legal tender - but now, it’s more of a suggestion than a law.
Remittances Didn’t Change
One of the biggest promises? Cutting remittance costs. But in 2024, remittance fees were still around 5-7%. Why? Because most people still use traditional services. Why? Because Bitcoin is too unpredictable. A $500 wire from the U.S. might arrive as $480 worth of Bitcoin - or $520. No one knows until the transaction clears. For families relying on that money for food and rent, that uncertainty is a dealbreaker. Even the government’s own data shows little change. Remittance volumes didn’t spike. Costs didn’t drop. The system stayed the same - just with a few extra steps.Foreign Investment? Barely There
Bukele promised Bitcoin would attract tech investors and crypto startups. Some came - but not many. A few blockchain firms opened offices. A handful of Bitcoin mining operations started up, using geothermal energy from volcanoes. But the promised flood of capital? It didn’t happen. Why? Because investors don’t want to put money into a country with unstable fiscal policy. They don’t want to risk their capital on a government that spends public funds buying volatile assets. They don’t want to deal with unclear regulations. The “Bitcoin nation” label didn’t attract innovation. It scared off traditional investors.
What’s Left? A Legal Tender in Name Only
Today, Bitcoin is still legal in El Salvador. But you won’t find many shops accepting it. Gas stations that offered discounts now take dollars only. Restaurants, markets, and street vendors? They still use cash. The Chivo app still exists - but it’s mostly used to cash out Bitcoin into dollars, not to spend it. The government no longer promotes it like before. No more free Bitcoin bonuses. No more ads on TV. The enthusiasm has faded. What remains is a $150 million loss, a damaged reputation, and a policy that didn’t deliver on its promises.The Bigger Lesson: Technology Alone Doesn’t Fix Economics
El Salvador didn’t fail because Bitcoin is bad. It failed because it treated a financial tool like a silver bullet. No currency, no matter how new or flashy, can fix deep problems like poverty, weak infrastructure, or lack of education. You can’t force adoption with incentives if people don’t trust the system or understand how it works. Countries like Nigeria and Kenya built digital payment systems using simple mobile money - no blockchain, no Bitcoin. Millions use them daily. Why? Because they’re reliable, easy to use, and tied to real money. El Salvador’s experiment wasn’t about innovation. It was about spectacle. And spectacles don’t pay bills.What Now?
El Salvador still holds Bitcoin. It still has the law on the books. But the real policy shift happened quietly: they stopped pushing it. The government is now focusing on rebuilding trust with the IMF, stabilizing the dollar-based economy, and fixing basic services - roads, schools, electricity. Bitcoin didn’t save El Salvador’s economy. It nearly broke it. The lesson? Financial inclusion doesn’t come from flashy tech. It comes from simple, reliable systems that work for everyone - not just the tech-savvy few. And sometimes, the best move isn’t to leap into the future. It’s to fix the ground you’re standing on.Is Bitcoin still legal tender in El Salvador?
Yes, Bitcoin is still legally recognized as tender alongside the U.S. dollar under the 2021 Bitcoin Law. But in practice, the government no longer enforces mandatory acceptance, and most businesses and citizens use U.S. dollars. The law exists on paper, but daily use has collapsed.
Did Bitcoin reduce remittance costs in El Salvador?
No. Despite claims, remittance fees remain around 5-7%, similar to pre-Bitcoin levels. Most Salvadorans still use traditional services like Western Union because Bitcoin transactions are unpredictable, slow to settle in practice, and harder to understand. The promised cost savings never materialized for the average household.
Why did the IMF intervene in El Salvador’s Bitcoin policy?
The IMF stepped in because El Salvador’s Bitcoin purchases created fiscal risk. The government spent $150 million buying Bitcoin at high prices, then watched its value drop. This threatened the country’s ability to repay debt. In exchange for a $1.4 billion loan in 2024, El Salvador agreed to stop buying Bitcoin and limit its role in public finance to avoid further instability.
How many people in El Salvador actually use Bitcoin daily?
Fewer than 5% of the population uses Bitcoin regularly for transactions. Most who downloaded the Chivo app used it once - to cash out their free $30 bonus - and then stopped. The active user base is small, mostly young, urban, and already banked. The unbanked majority never adopted it.
Did Bitcoin attract foreign investment to El Salvador?
Not meaningfully. A few crypto firms opened offices, and some Bitcoin mining operations began using volcanic energy. But overall foreign direct investment didn’t increase. Investors avoided El Salvador due to policy uncertainty, lack of transparency, and the government’s risky handling of public funds. The “Bitcoin nation” branding didn’t attract capital - it raised red flags.
What’s the current status of the Chivo wallet app?
The Chivo app still exists but is largely inactive. The government stopped promoting it. Free Bitcoin bonuses ended. Discounts on gas and other services were dropped. Most users abandoned it after cashing out their initial bonus. It now serves mainly as a tool to convert Bitcoin to dollars, not as a payment platform.
Could another country copy El Salvador’s Bitcoin experiment?
Unlikely. El Salvador’s move was a political gamble tied to President Bukele’s popularity and centralized control. Other nations have seen the risks: price volatility, IMF backlash, failed adoption, and public distrust. Countries like Panama and Ukraine have explored crypto, but none have made it legal tender. Most prefer regulated digital currencies or stablecoins instead.
Hamish Britton
November 14, 2025 AT 15:48Man, this whole thing is such a classic case of tech solutionism. Like, yeah, Bitcoin sounds cool on paper, but if your population doesn’t have reliable internet or understand what a private key is, you’re not building inclusion-you’re building a digital divide with extra steps.
Robert Astel
November 15, 2025 AT 06:07you know what’s funny? people act like bitcoin was the problem but honestly the real issue was the government thinking they could just slap a blockchain sticker on a broken economy and call it a revolution. like bro you can’t fix poverty with a wallet app and a free $30 bonus. i mean come on. the unbanked don’t need crypto they need banks. or at least a system that doesn’t crash every time the moon goes up. also the chivo app was a disaster. i tried it once and it froze my phone. not the future. more like the past’s ghost haunting a smartphone.
Rachel Anderson
November 17, 2025 AT 00:53Oh sweet heavens. El Salvador didn’t fail because Bitcoin is flawed-it failed because they confused spectacle with substance. This wasn’t economic policy. It was a TikTok trend dressed in constitutional robes. A president playing crypto influencer while the poor still pay 7% to send money home. The real tragedy? They could’ve built a mobile money system like M-Pesa in 18 months. Instead, they bought a speculative asset and called it sovereignty. How poetic. The future of finance? A nation drowning in Bitcoin while its people drown in debt.
Kelly McSwiggan
November 18, 2025 AT 11:28So let me get this straight: the government spent $150M on a volatile asset, created a glitchy app, ignored basic financial literacy, and now wants applause for ‘thinking outside the box’? I’m not shocked. I’m just disappointed in how easily we’ve normalized this kind of performative governance. It’s not innovation. It’s fiscal performance art.
Byron Kelleher
November 19, 2025 AT 09:01I get why people are frustrated, but let’s not throw the baby out with the bathwater. The idea of financial inclusion is still valid. Maybe Bitcoin wasn’t the right tool, but the goal? Pure gold. What El Salvador needed was education, infrastructure, and patience-not a crypto hype cycle. The lesson isn’t ‘Bitcoin bad.’ It’s ‘speed over substance always backfires.’
Katherine Wagner
November 19, 2025 AT 19:12Bitcoin legal tender? Sure. Mandatory? Nah. The law’s still there. The spirit? Buried under $150M in losses and 2 million abandoned apps. They didn’t fail because of crypto. They failed because they thought tech would fix a problem that needed human solutions. And now the IMF’s holding their wallet. Classic.
ratheesh chandran
November 20, 2025 AT 04:39you know what really hurts? the fact that people in rural areas were never consulted. they just got an app shoved in their face with a $30 bonus like its a birthday gift. but how do you explain blockchain to someone who’s never seen a credit card? or who walks 3 hours to the nearest town? this wasn’t innovation. it was colonialism with a blockchain logo. and now they’re stuck with a digital ghost town.
Hannah Kleyn
November 20, 2025 AT 21:11I’ve been following this since day one and honestly I think the most interesting part isn’t the Bitcoin failure-it’s how fast the government just… stopped talking about it. No press conferences. No grand apology. Just silence. Like they knew they messed up and figured if they ignored it long enough, people would forget. And honestly? It’s working. Nobody’s talking about Chivo anymore. Just the $150M loss. And the IMF loan. And the fact that remittances still cost the same. The silence is louder than any press release.
Vanshika Bahiya
November 21, 2025 AT 09:08Let me say this clearly: financial inclusion isn’t about the tech. It’s about trust, accessibility, and simplicity. Kenya’s M-Pesa didn’t need blockchain. It needed a phone, a PIN, and a network of agents in every village. El Salvador had the will but not the wisdom. The real innovation? Not Bitcoin. Not Chivo. The people who kept sending cash through Western Union because it worked. They were the unsung heroes.
Kandice Dondona
November 21, 2025 AT 12:27Imagine being a mom in San Miguel and your kid’s school fee is due tomorrow… but your Bitcoin wallet says ‘transaction failed’ again. You’re not thinking about decentralization. You’re thinking about rice. 🥲 This isn’t a tech story. It’s a human one. And the humans lost.
Drew Monrad
November 22, 2025 AT 09:47Okay but let’s be real-this was never about Bitcoin. It was about Bukele flexing. He wanted to be the Elon Musk of Central America. And he got his meme. Now the country’s stuck with a $150M paperweight and a reputation as a crypto gamble. The real tragedy? The people who believed him. The ones who downloaded Chivo hoping for change. They got a glitchy app and a lesson in hubris.
gary buena
November 23, 2025 AT 03:22funny how everyone acts like this was a bold move. bro it was a PR stunt wrapped in a white paper. the only thing this did was make the world laugh and the IMF panic. and now they’re begging for a loan like a kid who spent their allowance on nft monkeys. i mean… what did you expect? you can’t fix poverty with a blockchain and a selfie.
Albert Melkonian
November 23, 2025 AT 10:46The failure of El Salvador’s Bitcoin experiment does not invalidate the potential of digital currencies. It highlights the critical importance of institutional readiness, public education, and phased implementation. A nation cannot leapfrog its foundational economic structures through technological fiat. Sustainable progress requires incremental, inclusive, and evidence-based policy-not ideological spectacle.
anthony silva
November 25, 2025 AT 04:47So the government spent $150M on Bitcoin… and now everyone’s acting surprised? Really? You thought this wouldn’t go sideways? I mean… it’s Bitcoin. It’s literally designed to be chaotic. Did they think it was gonna be stable? Like… a savings account with a cool logo?
David Cameron
November 25, 2025 AT 14:44They didn’t fail because they used Bitcoin. They failed because they thought the tool mattered more than the people. The unbanked didn’t need a wallet. They needed a system that didn’t make them feel stupid every time they tried to pay for bread. Tech doesn’t fix trust. People do.
Andrew Parker
November 27, 2025 AT 04:05It’s not just about Bitcoin. It’s about the soul of governance. When a leader turns national policy into a viral video, the people become props. The $30 bonus? A dopamine hit for the algorithm. The $150M loss? A sacrifice on the altar of ego. And now the country’s debt is a footnote in a crypto influencer’s bio. I’m not mad. I’m just… heartbroken for the people who were never asked.
Mandy Hunt
November 29, 2025 AT 02:22Bitcoin was never the goal. It was a distraction. The real plan? To use crypto as a smokescreen to hide the fact that they were laundering money and avoiding IMF oversight. The ‘revolution’? A front. The $1.4B loan? The real exit strategy. Don’t be fooled. This was a heist dressed as a utopia.
Cherbey Gift
November 30, 2025 AT 21:06yo you ever seen a grandma trying to scan a QR code for Bitcoin? she’s holding the phone like it’s a snake. she just wants to buy yams and feed her grandkids. you don’t give her a blockchain. you give her a simple app that works like a text message. El Salvador didn’t fail because of crypto. they failed because they forgot that money isn’t about tech. it’s about dignity.
Becky Shea Cafouros
December 1, 2025 AT 09:24They made Bitcoin legal tender. But they didn’t make it usable. That’s like making ‘flying’ legal tender and then not building any planes. Brilliant. Absolutely brilliant. Now the whole country’s stuck in a holding pattern of confusion and debt. Bravo.
Sara Lindsey
December 1, 2025 AT 13:37It’s wild how fast people forget. Two years ago everyone was calling El Salvador the future. Now? Crickets. And the worst part? The people who actually tried to use it are the ones still stuck with the mess. No one’s helping them fix their wallets. No one’s refunding the fees. Just… silence. Like it never happened.
alex piner
December 1, 2025 AT 23:07look i get the hype but real talk: if your solution to poverty is a phone app that crashes every time you try to pay for beans… maybe try fixing the beans first? the tech was flashy but the heart was missing. people don’t need crypto. they need to eat. and they need to know their money won’t vanish before they get to the market.
Kevin Hayes
December 3, 2025 AT 03:04There’s a deeper truth here: financial systems are not built on hype. They are built on consistency, reliability, and institutional credibility. Bitcoin’s volatility, combined with the absence of regulatory clarity and public education, created a perfect storm. The government didn’t innovate-they destabilized. And in doing so, they exposed a fundamental flaw in modern policy-making: the belief that technological novelty can substitute for economic competence.
Anthony Forsythe
December 5, 2025 AT 02:18El Salvador didn’t try to fix their economy. They tried to rebrand it. Like putting a Tesla logo on a donkey cart and calling it progress. Bitcoin was never meant to be a currency for the poor. It was meant to be a speculative gamble for the rich. And now the poor are stuck holding the bag while the rich tweet about ‘decentralized sovereignty.’ The real revolution? The one where the people stop believing in magic.
sandeep honey
December 6, 2025 AT 10:51you know what’s sad? the fact that people in the US and UK are acting like they didn’t see this coming. like they’re shocked. bro we told you. crypto isn’t a currency. it’s a casino. and El Salvador walked in with all their money and bet on a red number. now they’re broke. and the rest of us just watched. and laughed. and waited for the next dumb idea.
Cody Leach
December 7, 2025 AT 04:25One sentence: Bitcoin didn’t fail El Salvador. Hubris did.