Two years after El Salvador adopted Bitcoin as legal tender, adoption remains low as citizens question the cryptocurrency’s benefits, according to former Ethereum lead developer Lane Rettig.
In a recent talk at EthCC 2023, Rettig gave an update on El Salvador’s Bitcoin experiment, which he first discussed in 2021. Having visited the country twice since the law was passed, Rettig found that the adoption of Bitcoin remained despite considerable promotion by the government.
The people of El Salvador are not impressed by Bitcoin
“Very few of them are actually using Bitcoin every day,” Rettig said, referring to the 4 million Salvadorans who downloaded the state-sponsored Chivo wallet for a $30 Bitcoin bonus.
According to Rettig, less than 2% of remittances flow through Bitcoin, even after the government opened Chivo ATMs across the United States. Research also shows that the use of digital payments and Bitcoin in El Salvador is low and declining over time.
“Most people don’t think Bitcoin benefits them,” Rettig said, citing a recent essay by a Salvadoran resident. “This is not primarily an accepted medium of exchange in El Salvador, despite promotion by the government.”
Adjacent Bitcoin Improvements in El Salvador
However, Rettig claimed that the Bitcoin law has significantly reduced crime, which he called a “massive improvement in the quality of life.” Recent polls show that over 80% of Salvadorans believe that crime has fallen under Bukele’s administration. Citizens say they feel safer going out at night for the first time.
Bitcoin ATMs grew dramatically from just two in 2021 to over 200 nationwide. El Salvador now boasts coverage that rivals major global cities, with ATMs even in remote villages. Fees at these ATMs are negligible, in Rettig’s experience.
In another positive development, El Salvador recently passed a digital asset law to provide a legal framework for the creation of Bitcoin-based organizations. This has attracted crypto entrepreneurs to invest in mining and other business ventures in the country.
Human rights concerns
However, concerns remain about democracy and human rights under the increasingly authoritarian rule of President Nayib Bukele. Bukele’s administration allegedly bribed gangs and built one of the world’s largest prisons to crack down on violence, imprisoning nearly 2% of the adult population without due process.
Bukele also removed presidential term limits, bypassing the Supreme Court. Critics worry that he is sliding the country into dictatorship while failing to bring economic benefits to ordinary citizens through Bitcoin.
While optimistic about Bitcoin’s potential, Rettig stressed that more work is needed to build trust. “To get people to trust it and use it, again, there’s a lot of work to be done there,” he said. Rettig remains hopeful that El Salvador’s Bitcoin experiment will ultimately empower people through financial inclusion.
