El Salvador made history in September 2021 by being the first nation to formally adopt Bitcoin as legal money.
Businesses in El Salvador have been sluggish to accept Bitcoin (BTC) even after the nation publicly acknowledged the digital currency as legal cash in September 2021, according to a new poll by the Salvadoran Chamber of Commerce.
Of the 337 organisations questioned between Jan. 15 and Feb. 9, just 14 percent stated they had transacted in BTC since the Bitcoin Law came into force. Over 90 percent of the firms responded that Bitcoin adoption in the nation had no influence on their sales.
Seventy-one percent of the firms questioned were micro or small businesses, 13 percent categorised as medium-sized organisations and 16 percent were major corporations.
While the low adoption rate may look lacklustre at the surface, El Salvador has been on the U.S. dollar standard since 2001. Unlike the currencies of other developing countries, El Salvador’s major means of exchange is not prone to exchange-rate volatility. Even in this context, more than one-in-ten firms in the nation reported Bitcoin use during a five-month period.
Salvadoran President Nayib Bukele has placed Bitcoin towards the core of his economic development agenda even as institutions like the International Monetary Fund and Moody’s Investors Service have advised against embracing the flagship cryptocurrency. In January, Moody’s analyst Jaime Reusche said that Bukele’s Bitcoin gambit may harm his country’s sovereign credit outlook.
Nevertheless, El Salvador is going ahead with its crypto plan by issuing $1 billion worth of Bitcoin bonds. Also known as Volcano Bonds, the revenues of the sale will go towards financing Bitcoin City, a fully operational city that will harness geothermal energy to mine the digital commodity. Bukele is set to appear at the next Bitcoin 2022 conference, where he has promised a “huge surprise.”
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