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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.