El Salvador shocked the world in 2021 by becoming the first country to adopt bitcoin as legal tender. Two years after that decision, the data shows that the bet was not in vain. Despite the problems that the digital wallet Chivo, created by the government to facilitate the use of cryptocurrency, has had, remittances sent in bitcoin to the Central American country have grown more than 1,000% since then.
When President Nayib Bukele announced that bitcoin would become legal tender in El Salvador, many were skeptical. Would people really use such a volatile digital currency to send money to their families? But the numbers speak for themselves.
In 2021, before bitcoin was adopted, remittances in cryptocurrencies amounted to just 0.1% of the total sent to the country. By 2022, that percentage had risen to 1.7%, representing an incredible increase of more than 1,000% in just two years.
Despite the fall in bitcoin prices during 2022 and the technical problems with the Chivo Wallet, between 1% and 2% of all remittances entering El Salvador in 2023 have been in cryptocurrencies. This means that even in difficult times, the use of bitcoin to send money to the country has remained stable.
Experts believe it is an achievement, considering that less than two years ago that percentage was less than 1%. Going from that during a period of low prices is impressive growth and points to a positive future when the price of bitcoin recovers.
Although the sending of remittances in bitcoin has fallen in 2023 compared to the previous year, this is mainly due to the fall in the price of cryptocurrency. But use has remained stable between 1% and 2%, demonstrating that Salvadorans continue to bet on this technology.
Technical problems with the Chivo Wallet
Much of the statistics on bitcoin remittances come from the use of the Chivo digital wallet, created by the government of El Salvador. But the application has suffered multiple technical problems, including sudden loss of funds, which has led many Salvadorans to stop using it.
This possibly influences the decrease in bitcoin remittances observed this year, since transactions made from other digital wallets are not counted. If that data were incorporated, it is likely that the real percentage of remittances in cryptocurrencies would be higher.
Despite the setbacks with Chivo, the increase of more than 1,000% in sending remittances with bitcoin shows that El Salvador's bet on cryptocurrencies is working. And this trend is expected to continue to rise as more Salvadorans abroad discover the advantages of sending money to their families using this technology.
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