Bitcoin Is Not a Widely Accepted Medium of Exchange in El Salvador

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Bitcoin Is Not a Widely Accepted Medium of Exchange in El Salvador – According to a preliminary research published by the United States’ National Bureau of Economic Research (NBER), the majority of Salvadorans ceased using the Chivo wallet after receiving their $30 bitcoin bonus. According to the survey, the average Chivo wallet user made no deposits or transfers in a given month.

After analyzing bitcoin as legal tender in El Salvador, an April 2022 working study released by the NBER examines if cryptocurrencies are actually currencies. During the month of February 2022, the NBER conducted a face-to-face poll with 1,800 Salvadoran families.

According to the survey, Salvadorans do not use the Chivo wallet very frequently, and El Salvador’s central bank reported in February that only 1.6 percent of remittances were transmitted via digital wallets.

Also Read: Bank of Spain Report Warns About Cryptocurrency Usage and Its Effect on Financial Stability

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“The majority of users who utilized Chivo after paying the $30 bonus did not engage with the app intensively,” according to the report. In addition, the NBER researchers discovered that the fixed cost of adopting the Chivo wallet was quite high.

Furthermore, the study indicates that if it hadn’t been for the $30 bitcoin bonus, 75 percent of the Salvadorans polled would never have used it. According to NBER researchers, about four out of every ten people who downloaded Chivo wallet use it.

“The elasticity of substitution between Chivo Wallet and other payment methods appears to be considerable,” the study shows. “On average, among Chivo Wallet users, 10% report spending less cash and 11% report using fewer debit or credit cards since downloading Chivo.”

Sadly, despite all reports to the contrary, the NBER survey finds that just 20% of Salvadoran firms accept bitcoin as a medium of exchange. 90% of such businesses were enterprises, and “88% of businesses convert money from bitcoin sales into dollars.”

Also Read: National Assembly of Panama Advances Discussion of Cryptocurrency Law Project

Bitcoin Is Not a Widely Accepted Medium of Exchange in El Salvador – According to the NBER’s data, approximately 5% of Salvadorans paid their tax obligations using bitcoin (BTC).

“Overall, despite bitcoin’s legal tender status and the government’s large incentives, the cryptocurrency is mostly not an accepted medium of exchange in El Salvador,” the NBER study report concludes.

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