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El Salvador Insight: While 82% of businesses accept Bitcoin, only 1% of remittances actually use it. This calculator shows the theoretical savings potential.
El Salvador didn’t just try Bitcoin-it made it legal tender. In September 2021, it became the first country in the world to do so, betting everything on a digital currency that had never been used this way before. The goal was simple: give unbanked citizens access to money, slash remittance fees, and break free from the U.S. dollar’s grip. But by January 2025, the government quietly walked back the law. Not because Bitcoin failed, but because the cost of keeping it as legal tender became too high.
Why Bitcoin? The Problem El Salvador Was Trying to Solve
About 70% of Salvadorans had no bank account. Sending money home from the U.S. cost up to 15% in fees-money that went straight to intermediaries like Western Union. For families living paycheck to paycheck, that’s a huge hit. Bitcoin promised to cut those fees to near zero. No middlemen. No delays. Just direct peer-to-peer transfers using a phone. President Nayib Bukele didn’t just talk about it-he acted. The government rolled out the Chivo Wallet a state-backed digital wallet for Bitcoin transactions, launched in 2021 with $30 in free Bitcoin for every citizen who signed up. They installed Bitcoin ATMs in towns and cities. They offered tax breaks to businesses that accepted it. The message was clear: Bitcoin wasn’t optional. It was the future.The Reality: High Adoption, Low Usage
By 2025, 82% of small businesses in El Salvador accepted Bitcoin. That’s impressive. But here’s the twist: only 1% of remittances actually used it. Most people got paid in U.S. dollars. Most paid for groceries in U.S. dollars. Even when businesses accepted Bitcoin, they instantly converted it to dollars to avoid price swings. The Chivo Wallet? It never took off. Too many glitches. Too little support. Too many people didn’t understand how to use it. By 2022, more Salvadorans had Bitcoin Lightning wallets than bank accounts-but that didn’t mean they were using them daily. It meant they were holding Bitcoin like a gamble, not a currency. The government thought people would embrace Bitcoin because it was new and exciting. They didn’t account for how scary it is to trust your life savings to something that can lose 30% of its value in a week.The Reserve That Kept Growing
While everyday people stayed away, the government kept buying Bitcoin. El Salvador created a Strategic Bitcoin Reserve Fund a government-held pool of Bitcoin acquired to stabilize the economy and support long-term value. Even after dropping legal tender status, they kept purchasing. In March 2025, the reserve hit 6,102 Bitcoin-worth roughly $500 million at the time. That’s not a small amount. It’s more than 10% of the country’s annual defense budget. They didn’t sell. They didn’t panic. They bought more. In early 2025 alone, they added 8 more Bitcoin. Why? Because they still believe in it. Not as money. But as an asset.
The IMF Forced a Change
In 2023, El Salvador was running out of cash. The economy was struggling. The government needed a $1.4 billion loan from the International Monetary Fund (IMF) an international organization that provides financial assistance and policy advice to member countries. The IMF said yes-but only if El Salvador scrapped Bitcoin as legal tender. It wasn’t a suggestion. It was a condition. The IMF argued Bitcoin’s volatility threatened financial stability. They worried about money laundering risks. They didn’t trust the government’s ability to manage a crypto reserve. And they were right to worry-Bitcoin’s price swings had already cost the treasury millions. In January 2025, El Salvador officially removed Bitcoin’s legal tender status. Businesses no longer had to accept it. Citizens weren’t forced to use it. The law was changed. But the government didn’t stop owning Bitcoin. They just stopped pretending it was money.What’s Left? A Crypto Hub, Not a Bitcoin Nation
El Salvador didn’t give up on crypto. It just changed its game. The country still plans to build Bitcoin City a proposed futuristic city powered by Bitcoin, geothermal energy, and blockchain technology, planned near the Conchagua volcano. They still host the PLANB Forum 2025 the largest crypto conference in Central America, held in El Salvador in March 2025, drawing global investors and developers. They still offer tax exemptions to crypto businesses. They’re not trying to make Bitcoin the national currency anymore. They’re trying to make El Salvador the most welcoming place in Latin America for crypto startups, miners, and investors. Think of it like Dubai for Bitcoin-not because it’s legal tender, but because it’s the easiest place to build a crypto business.
Mike Calwell
November 15, 2025 AT 23:24Bitcoin in El Salvador? More like Bitcoin in chaos.
Rick Mendoza
November 17, 2025 AT 20:15Let’s be real - forcing a volatile asset as legal tender was always a crypto bro fantasy wrapped in nationalist propaganda. The IMF had the decency to intervene before the whole thing imploded. Real economics doesn’t care about your Twitter threads.
Lori Holton
November 18, 2025 AT 09:48Interesting how the same people who scream about ‘government overreach’ suddenly cheered when a dictatorship mandated Bitcoin. Coincidence? Or is this just another step toward the surveillance state disguised as financial freedom? The Chivo Wallet had a backdoor - I know it.
Bruce Murray
November 19, 2025 AT 21:12I think the real win here isn’t the Bitcoin holdings - it’s that El Salvador finally realized you can’t force innovation. Letting people choose, not mandate, might actually be the most crypto-native move they’ve made yet.
Barbara Kiss
November 19, 2025 AT 22:22There’s a quiet poetry in this failure - the government tried to turn a decentralized, permissionless network into a state-controlled currency, and in doing so, revealed the fundamental contradiction at the heart of the whole experiment. Bitcoin thrives in the margins, not in ministries. The reserve isn’t a financial strategy - it’s a monument to faith in something that refuses to be tamed.
They didn’t lose Bitcoin. They lost the illusion that they could own it.
Aryan Juned
November 21, 2025 AT 08:32Brooooooo 😍🔥 El Salvador didn’t fail - they just got too real for the world! Bitcoin City is gonna be next level 🚀💸 Imagine sipping coconut water while mining with volcano heat 🌋🤯 #BitcoinIsTheFuture #BukeleIsTheChosenOne
Nataly Soares da Mota
November 23, 2025 AT 05:47The institutionalization of Bitcoin as legal tender was a category error - conflating technological infrastructure with monetary sovereignty. The state’s attempt to operationalize a non-sovereign asset through coercive adoption exposed a deeper epistemological flaw: the belief that governance can engineer emergent behavior. The Chivo Wallet was a centralized proxy for a decentralized ideal - a contradiction in ontological terms.
What’s fascinating is the pivot: not abandoning Bitcoin, but reclassifying it as a strategic reserve asset. That’s not surrender - it’s meta-adoption. They stopped trying to make it money and started treating it like digital gold. That’s the real innovation.
Teresa Duffy
November 24, 2025 AT 16:03Look - I get why people are skeptical. But think about the entrepreneurs, the miners, the devs who moved there because of this. They’re building real stuff. The people who lost money? They were gambling. The ones who stayed? They’re creating a new economy. This isn’t over - it’s just getting interesting.
Sean Pollock
November 25, 2025 AT 04:15ok so the gov bought bitcoin but people didnt use it? duh. thats like buying gold and telling people to use it to buy bread. lol. also why is everyone acting like this wasnt a publicity stunt? bukele is a showman. the whole thing was theater. but hey at least they got a cool volcano city now 🤷♂️
Carol Wyss
November 26, 2025 AT 01:22It’s okay if this didn’t work the way they hoped. What matters is that they tried something bold - and then listened. That’s rare. I’m proud of them for adjusting. Not every experiment needs to be a win to be meaningful.
Student Teacher
November 26, 2025 AT 18:47I’m a teacher and I showed my students this case study. They were fascinated. One asked, ‘So if Bitcoin isn’t money, what is it?’ And I said - it’s a bet. A bet on the future. And sometimes, the bet matters more than the outcome.
Ninad Mulay
November 27, 2025 AT 11:17From India, I’ve seen how people treat crypto - as a lottery ticket, not a currency. El Salvador’s story is just a mirror. People don’t need mandates. They need trust. And trust? That takes time. Maybe next time they’ll let the market decide.
Jay Davies
November 28, 2025 AT 09:51El Salvador’s Bitcoin experiment was a textbook case of regulatory overreach masquerading as financial innovation. The IMF’s intervention was not only justified - it was necessary. Volatility, lack of consumer protection, and systemic risk to a dollarized economy were all foreseeable. The fact that they retained the reserve suggests a pragmatic recalibration, not a philosophical evolution.
Grace Craig
November 30, 2025 AT 01:23The notion that a sovereign state can unilaterally impose a decentralized, non-sovereign asset as legal tender is not merely misguided - it is an ontological contradiction. The state, by its nature, seeks control; Bitcoin, by its architecture, resists it. The failure was not in the technology, but in the hubris of institutional arrogance.
Astor Digital
December 1, 2025 AT 15:11Most people think this failed because Bitcoin is volatile. But honestly? It failed because no one explained how to use it. I’ve seen grandmothers in rural villages trying to scan QR codes with broken phones. Tech doesn’t matter if it doesn’t reach the people who need it most.
Nidhi Gaur
December 2, 2025 AT 01:51Let’s be honest - this was a power grab disguised as financial reform. The Chivo Wallet was a backdoor to track every transaction. They didn’t want financial freedom. They wanted surveillance with a blockchain logo.
Usnish Guha
December 2, 2025 AT 17:31Anyone who still defends this experiment is either a crypto cultist or a naive idealist. You don’t fix poverty by forcing people to gamble on a speculative asset. This isn’t innovation - it’s financial abuse dressed up as progress.
satish gedam
December 2, 2025 AT 23:36Hey friends - I know it seems messy, but look at what’s growing from this! Bitcoin miners in El Salvador are now training local youth in blockchain. Schools are teaching crypto literacy. The real win isn’t in the treasury - it’s in the minds of the next generation. Keep going, El Salvador ❤️
rahul saha
December 3, 2025 AT 20:23so bukele bought btc and now its like… digital gold? lol. but wait - if its not legal tender anymore, why is the gov still buying? are they trying to become the new central bank? 😅
Marcia Birgen
December 5, 2025 AT 04:12It’s not about winning or losing. It’s about courage. Trying something no one else dared to try - and then having the humility to change course. That’s leadership. I’m rooting for them.