Last year, cryptocurrency reached an all-time high bringing mass excitement to the idea of digital currency. After the massive rise of tokens like Bitcoin and Ethereum, the adoption of said currencies became more accepted, and countries like Japan even started to make their own currencies. However, no one went as hard on crypto as the country of El Salvador.
Salvadorans move back to cash
In an article by Rest of World, the El Salvador crypto scheme has been described as “crumbling”. After months of technical issues, volatile value shifts and general confusion, most businesses are already abandoning the techno-cash for real, tangible money.
Even on the country's “Bitcoin Beach”, a location that glorified the adoption of the currency, the “crypto future” has already waned. As it turns out, it’s hard to keep a business running on a currency that rapidly loses value.
“We were losing money because of the way the currency loses value,” said restaurant and surf shop worker Axel Medina. “It was difficult to maintain our business like that.”
José Bonilla, one of the first citizens to sign up for the crypto service has also had enough. After attempting to use the technology for his business, Bonilla also returned to traditional forms of purchase.
El Salvador’s Bitcoin rush has been an incredibly messy affair. Business owners end up losing more money than an item is worth due to price declines. Additionally, citizens just trying to buy items were fraught with technical issues, and a slammed government help service meant everyone was left in the dark.
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How El Salvador became the Crypto Country
Back in September 2021, as Bitcoin was reaching record heights, the Central American country of El Salvador adopted the crypto coin as legal tender. The virtual currency was explained as a way to make monetary transactions easier as well as allow Salvadorans without bank accounts to reap all the benefits of having one.
To back the country's crypto focus, the Salvadorian government set aside $150 million for the project. This meant that anyone who signed up to use a select crypto wallet service — Chivo, which translates to “cool” — would be rewarded $30 in crypto.
Investing so heavily in cryptocurrency was a move heavily criticised by the Salvadoran public with thousands of protestors fighting against it. Additionally, worldwide financial advisors repeatedly warned against the adoption of Bitcoin, warning that it would destabilise the country's already rough economy.
Despite this, the country went forward with its plans. Now, six months later, the Crypto Country is losing its grip on the virtual currency, and it looks like it won't be recovering.