El Salvador adopts Bitcoin as fiat currency … “Eight months have passed, but it has not been established as a means of exchange”
Last year, in El Salvador, where Bitcoin was adopted as the world’s first legal currency, a survey showed that Bitcoin had not yet taken root properly.
On April 26 (local time), the National Institute of Economic Research (NBER), a private research institute in the United States, said, ‘Is cryptocurrency money? He published a report titled “Bitcoin as El Salvador’s Fiat Currency,” and analyzed that “cryptocurrency is not widely accepted as a means of exchange in El Salvador despite its fiat currency status and strong government incentives.”
This report is based on the results of a face-to-face survey conducted by NBER on 1,800 El Salvador adults in February this year with CID Gallup, a polling agency. As a result, only 20% of respondents said they were still using chivo, a Bitcoin wallet app created by the El Salvador government. According to the report, there was no evidence that the Cibo app is now widely used in El Salvador for tax payments or remittances. In fact, according to the El Salvador Central Bank, only 1.6% of all remittances as of February this year were made through digital wallets. This is the lowest rate since Chibo was born.
El Salvador was the first country in the world to grant fiat status to Bitcoin in September last year, following the strong will of President Nayb Bukele. One of the reasons El Salvador has adopted Bitcoin as its fiat currency is that it saves money and time in remittances. Currently, in El Salvador, money sent by immigrants working abroad, such as the United States, plays a big role in the national economy, so it is important to streamline the remittance process.
The El Salvador government has been encouraging the use of bitcoin by providing a bonus bitcoin worth 30 dollars (about 38,000 won) to those who download the Chibo app after granting bitcoin legal currency status. At first, many people downloaded the Chibo app and received a bonus bitcoin to use it, but after a while, most users stopped using the Chibo app. In this survey, 75% of respondents said that they would not have downloaded Chibo if it hadn’t been for the bonus Bitcoin.
According to NBER’s analysis, respondents generally do not trust Bitcoin itself or the system. “Despite the strong government push, the use of Bitcoin in daily transactions was low, and most people do not trust the Bitcoin system,” the report said. However, it was found that the use rate was concentrated among young men with a high level of education.
In addition to adopting Bitcoin as a legal currency, El Salvador is continuing the so-called ‘Bitcoin experiment’ by announcing several plans such as the construction of a Bitcoin city and the issuance of Bitcoin bonds. The issuance of Bitcoin bonds was originally scheduled last month, but the issuance was put on hold as uncertainty and volatility increased due to the Russian invasion of Ukraine.
Meanwhile, Bitcoin has been in a bear market recently due to the effects of global tightening caused by the Ukraine crisis and inflation (inflation). On April 26 (local time), the New York stock market plummeted with the tech stock Nasdaq leading the way, putting further downward pressure on the Bitcoin price. According to CoinMarketCap, a global coin market relay site at 3:13 pm on April 27, Bitcoin is trading at $38,437.63, down 5.27% from 24 hours ago. On that day, the price of Bitcoin fell to $37,884.99 and fell to the $37,000 level.
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