09.12.2021

Why Bitcoin may not become popular in El Salvador after it is recognized as an official means of payment?

Many cryptocurrency enthusiasts were delighted with the decision that was previously made by the government of El Salvador. Recall, at the suggestion of President Nayib Bukele, the country’s parliament approved Bitcoin as a legal means of payment on the territory of the state.

However, the Salvadorans themselves treat all this with a noticeable degree of skepticism – and the majority, it seems, did not approve of the adoption of cryptocurrency and do not understand it.

The decision to recognize Bitcoin as an official means of payment in El Salvador was made in June 2021. During this period, the country’s President Nayib Bukele made it clear about his love for the first cryptocurrency and even added laser eyes to his Twitter avatar – a symbol of BTC fans who believe in its growth to 100 thousand dollars and above.

Bukele’s ambitions are serious. Shortly after the approval of Bitcoin as the national currency in Congress, the President announced the distribution of the equivalent of $ 30 in BTC to every adult citizen of the country. Thus, the latter will have a reason to get acquainted with the technology and conduct the first transactions in cryptocurrency.

Most importantly, other countries have begun to adopt this experience. In particular, on July 14, Paraguayan congressmen plan to present a bill on the use of Bitcoin in the country. The details of the document are unknown, but most likely it will focus on the recognition of BTC as an official means of payment within the state. This means Paraguay may well become the second country where bitcoins will be accepted legally and in large quantities.

But despite all the advantages of cryptocurrency against the background of ordinary money, most of the country’s residents are simply not ready for such changes. Here is their point of view.

El Salvador and Bitcoin: What’s the Problem?

According to a study commissioned by the Center for Civic Studies (CEC) at the University of Francisco Gavidia (UFG), three out of four Salvadorans (77 percent) consider Bukele’s decision “not very far-sighted” or “short-sighted”. At the same time, only 12.9 percent of the population called it a “wise” step, and 6.5 percent fully supported the adoption of the digital asset.

That is, there are very few fans of digital assets who already understand the potential for BTC to be recognized as an official means of payment within the country. And this is logical, because Bitcoin itself has been operating since 2009, and many users have contacted the cryptocurrency industry in 2020 or even in 2021.

chart poll El Salvador Bitcoin

Data from the survey in the form of a chart. Most are unaware of the prospects of what is happening

According to Decrypt, no age group considers Bukele’s solution to be a success by age. As part of the study, 1,233 people were interviewed in the period from 1 to 4 July 2021. The survey covered respondents from different social backgrounds in order to achieve greater sample diversity.

The level of statistical reliability of the survey was 95 percent, that is, the results of the study can be interpreted for the entire population of the country.

Despite the hype of news from El Salvador in the crypto community, the haste to take action and the lack of knowledge about digital assets among the Salvadorans played against the popularity of Bitcoin. 61 percent of merchandise sellers in El Salvador said they would not want to accept payments in BTC, and 64.8 percent of Salvadorans would not want to receive their salary in cryptocurrency. Among those who regularly receive money transfers, only 5.3 percent said they would like to receive money in BTC. However, this is practically nothing compared to the 82.8 percent majority, which still prefers dollars.

Recall that the national currency of El Salvador is the US dollar. However, now Bitcoin is also equated to it, which was first recognized as the official means of payment of the state in El Salvador. For example, this is how Siri’s voice assistant answers a question about national currencies in a given country.

After a wave of criticism, Bukele held a press conference to answer the most frequent questions and clarify some misunderstandings. He assured Salvadorans that receiving a salary in bitcoin would not be mandatory, and added that the state wallet would not be a priority initiative either. After the press conference, 33.9 percent of the population admitted that they really understand the purpose of Bitcoin adoption. At the same time, 20 percent still remained with their negative opinion. The remaining 44 percent did not watch the press conference.

It is possible that the massive adoption of BTC in the country plays into the hands of Bukele himself – this is the opinion of about a third of Salvadorans. Another 40 percent are confident that the new law will benefit large enterprises. In general, the urgency of the project is evident when analyzing the responses by age. The population over 65 considers Bitcoin to be a metal currency. People between the ages of 30 and 55 think that it is metallic and virtual currency. And only people between the ages of 18 and 29 really understand how the coin works.

Note that it takes a lot of time to fully understand the basics of blockchain, decentralization, mining and cryptocurrencies in general. A cursory study of the topic here will not be enough, therefore, most likely, even among the last sample of respondents, there are enough people who will not be able to answer basic questions about the blockchain.

El Salvador Bitcoin cryptocurrency adoption

President of El Salvador Nayyib Bukele

Taking into account all of the above data, it can be assumed that a rapid rise in the popularity of BTC in El Salvador is unlikely to happen – the majority of the local population simply does not understand why a cryptocurrency is needed. There are cryptocurrency investors in El Salvador, but their contribution to the spread of Bitcoin will be paltry compared to most. Nayib Bukele’s decision does look bad.

In addition, it carries with it additional problems for the image of Bitcoin itself – if, after its active integration with the country’s economy, any crisis occurs, this will not be reflected in the best way on all digital assets.

We believe that digital asset adoption will eventually happen, but it takes time. As the founder of the Chainlink project, Sergei Nazarov, once noted in a podcast, this process can be accelerated by global problems like the 2008 crisis. In this case, people will more willingly begin to switch to transparent financial systems based on an immutable blockchain, the advantages of which against the background of closed banks and funds are obvious even in a stable economy.

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