It’s been five years since El Salvador became the first country to adopt Bitcoin as legal tender.
President Nayib Bukele announced the plan at the Bitcoin conference in Miami on June 5, 2021, to the jubilant cries and applause of the Bitcoin community, who hailed the tiny Central American nation as living proof that BTC could be sovereign money.
Bukele sold the experiment as a way to bank the unbanked, slash remittance costs, and attract investment to the impoverished nation.
But five years on, who did the experiment benefit, and what did it actually achieve?
Dr. Tobias Boos, a senior scientist at the University of Vienna who leads a research project examining the political economy of Bitcoin in El Salvador, tells Magazine:
“There is little doubt that the project was a failure if we take seriously the reasons Bukele gave for its adoption. Foreign direct investment in this sector didn’t increase, it did not effectively bank the unbanked, and it is not widely used for remittances.”
Yet El Salvador’s Bitcoin bet undeniably changed the conversation around the world’s number-one cryptocurrency, and turned nation-state adoption from a theoretical possibility into a living, breathing reality. Whether it succeeded or failed depends on what you think El Salvador was trying to achieve.
Five years into El Salvador’s Bitcoin bet
In a video message played at Bitcoin 2021, Bukele said the adoption of Bitcoin would generate jobs in the short term and “help provide financial inclusion to thousands outside the formal economy.”
Today, the evidence for mass adoption is difficult to square with that ambition.
Research by Boos, Grigera and Schmid in 2025 found that the Salvadorans who adopted Bitcoin tended to be young, male, urban, more highly educated, and, perhaps more importantly, already banked. Boos concludes that, “Mass adoption by citizens did not occur.”
El Salvador had one of the region’s lowest levels of banking access at the time, with just 35.9% of people over 15 holding a bank account in 2021, according to World Bank data.
Account ownership at a financial institution (% of population ages 15+) – El Salvador. Source: World Bank
Yet the government’s Chivo Bitcoin wallet did little to solve the problem: it could transfer funds to bank accounts, but didn’t remove the underlying barriers preventing unbanked Salvadorans from accessing the financial system in the first place.
According to Boos and his colleagues, the same problem emerged with remittances, another pillar of Bukele’s pitch. In 2024, remittances accounted for around 24% of El Salvador’s gross domestic product, with the United States providing a full 98% of the total. But El Salvador adopted USD as its official currency more than 20 years ago, and having most remittances arrive from a country with the same currency removed one of the major cost reductions that Bitcoin could theoretically offer: currency conversion.
Related: Bitcoin will never fall below $60K again: Nansen founder
Despite the promise that Bitcoin could make these transfers cheaper, crypto wallets accounted for barely 1% of remittances by 2024, down from a peak of 1.7% in 2020-21.
It suggests the government’s early efforts to stimulate adoption failed to translate into sustained use. Chivo offered users $30 in Bitcoin for signing up, but the National Bureau of Economic Research’s nationally representative research found that more than 60% of early Chivo users never made another transaction after spending their free BTC.
Joe Nakamoto, a Bitcoin-focused journalist who has repeatedly reported from El Salvador, found a similar disconnect on the ground.
In a recent video documenting one of his visits, he said he tested Bitcoin acceptance at 21 shops in a San Salvador mall, and found that only four accepted Bitcoin, and just one did so smoothly. He tells Magazine:
“It’s very, very hard, borderline impossible to genuinely live on Bitcoin in El Salvador. Unless you’re just eating pupusas on the beach in El Zonte, and then going across to the other Bitcoin circular economies and finding workarounds.”
When the IMF pulled the plug
The government has also faced international pressure to retreat from its Bitcoin experiment. In December 2024, it reached a $1.4 billion financing agreement with the International Monetary Fund, under which it agreed to scale back its involvement in Bitcoin.
El Salvador’s experiment with Bitcoin as Legal Tender. Source: NBER
The deal was approved in February 2025, and in January, the government amended its Bitcoin law to make acceptance voluntary, require taxes to be paid in US dollars and limit public sector involvement in Bitcoin-related activities, effectively dismantling the most radical parts of Bukele’s experiment.
While Bitcoin could still be used voluntarily, the state no longer compelled businesses to accept it or used it as part of the country’s public financial system.
The IMF later found that Bitcoin had produced “no evidence”…
cointelegraph.com