The president of El Salvador, Nayib Bukele, promised that the adoption of bitcoin would bring 'prosperity, economic freedom and financial inclusion' to El Salvador — Photo: AFP via Getty Images
"In El Salvador, we are beginning to create a country for the future, preserving what makes us unique and seeking inspiration from the best ideas that have appeared in the world throughout history. And I believe that bitcoin can be one of them."
This is what President Nayib Bukele said in a message recorded and shown during the Bitcoin 2021 conference, held in March of that year, in Miami, Florida, in the United States, in front of an audience enthusiastic about the Bitcoin cryptocurrency.
At the time, Bukele announced that he would send a bill to the Legislative Assembly to make El Salvador the first country in the world to adopt bitcoin.
The announcement was received with a round of applause by the public, who saw an old ideal about to come true — and in September of that year, the country adopted Bitcoin as legal tender in the country (alongside the US dollar).
Five years later, the dollar became El Salvador's only official currency again, acceptance of bitcoin became optional and the promise to build a futuristic city, fueled by geothermal energy from a volcano and dedicated to cryptocurrency mining, never got off the ground.
After all, what is left of the “country of bitcoin”, as Bukele called El Salvador? What was accomplished of what was promised? And who benefited?
Bitcoin and promises
What remains of the project to transform El Salvador into the "country of bitcoin" five years later? — Photo: Getty Images via BBC
Bitcoin is basically a digital file that exists online and functions as an alternative currency. In this, it differs greatly from conventional currencies, such as the US dollar.
It is not printed by traditional governments or banks, but created by a complex computational process known as "mining."
🔍 All currencies and all transactions made with them are recorded on the internet network – in a space known as "blockchain", a type of decentralized database that uses cryptography to record transactions. This way, transactions cannot be traced.
And bitcoin has no "inherent value": its price is determined by how much people are willing to pay for it.
The initiative to adopt bitcoin in El Salvador began in June 2021, when the Legislative Assembly, controlled by the president's party, New Ideas, approved the law that made cryptocurrency the country's official currency, alongside the dollar — which had already been the country's official currency for two decades.
The promise was that the measure would bring “prosperity, economic freedom and financial inclusion”.
The government claimed that bitcoin would reduce the costs of sending money for Salvadorans living abroad, a source of resources that represents almost a quarter of the Gross Domestic Product (GDP, the sum of all goods and services produced in the country).
In 2025, they reached 26.3% of GDP, according to data from the Central Reserve Bank of El Salvador.
The adoption of cryptocurrency would also facilitate access to the financial system for informal workers without bank accounts and attract foreign investment.
To make the initiative viable, the government created a fund of US$150 million (R$748 million) and offered US$30 (R$150) to each citizen who installed the Chivo digital wallet on their cell phone.
It also allocated another US$50 million (R$249 million) to the installation of ATMs and other costs necessary to get the system up and running.
The government of El Salvador allocated US$50 million (R$249 million) to the installation of bitcoin ATMs and other project implementation costs — Photo: AFP via Getty Images
Nine months later, one of the first surveys on the measure already showed Salvadorans' skepticism towards bitcoin.
Among those interviewed by the University Institute of Public Opinion (Iudop), at the Central American University José Simeón Cañas (UCA), 71% stated that the adoption of cryptocurrency had not brought "any benefit to the family economy".
The result reinforced the conclusions of the National Bureau of Economic Research (NBER), a private American non-profit organization.
In a report published in April 2022, the entity found that the majority of people who installed the Chivo digital wallet stopped using it after spending the "bonus" offered by the government.
Bukele, in turn, continued to buy bitcoin with public money, despite warnings from experts about the risks to the country's finances. The concern was about the strong fluctuation in the price of the cryptocurrency, which lost more than 60% of its value in 2022.
"Sometimes I even do this when I'm in the bathroom," wrote Bukele in response to criticism on the social network then called Twitter (now X).
In January 2023, the Legislative Assembly took another step in Bukele's plan by approving the unprecedented and controversial Digital Asset Issuance Law, aimed at attracting foreign investment.
To convince large investors to bet on El Salvador's bitcoin adoption project and grant high-risk loans to the country, the government announced on Twitter that the new legislation paved the way for the issuance of so-called "volcano bonds", which, according to authorities, would begin to be offered soon.
It was, perhaps, the most ambitious stage of the project. The proposal envisaged that El Salvador would contract debts in bitcoin by issuing bonds on the international market, as governments do to raise funds, but, in this case, backed by cryptocurrency.
Half of the money raised would be used to buy more bitcoin. The other half would finance the start of construction of Bitcoin City, a planned city at the foot of the Conchagua volcano, in El Salvador.
Image of the 'Bitcoin City' model released by Bukele on the social network X — Photo: Nayib Bukele via Twitter
To complete the project, the futuristic city would use the volcano's geothermal energy to power the powerful computer systems responsible for creating new bitcoins, a process known as mining.
"The plan is simple: while the world descends into tyranny, let's create a haven of freedom," said Bukele, in a speech similar to that of the most fervent defenders of cryptocurrencies.
This movement has a strong presence in the USA, where the cryptocurrency market has gained ideological contours, driven by radical republicans and anarcho-capitalists.
These groups defend bitcoin as a way to reduce the power of central banks and state intervention in the economy. They also fuel the expectation that anyone can get rich if the price of cryptocurrency reaches exorbitant values.
But, after all, what came to fruition among the many promises made to transform El Salvador into the "country of bitcoin"?
Low adherence
"If we consider the reasons given by Bukele for adopting bitcoin, there is no doubt that the project failed," said economist Carlos Acevedo, former president of the Central Reserve Bank of El Salvador, in an interview with BBC News Mundo, the BBC's Spanish-language service.
"It is clear that the government expected that, at this point, the entire population would be using bitcoin. The approval of the law, the creation of the trust fund, the entire structure was designed for this, although previous research already showed that the population was very suspicious of this experience", explained Acevedo. "And in that sense, in fact, it didn't work."
In 2022, when enthusiasm for the initiative was at its peak, a CID-Gallup survey found that only 1 in 5 companies accepted bitcoin and that only 5% of tax payments were made with the cryptocurrency.
Two years later, in 2024, BBC News Mundo found, during a visit to the country, that the use of bitcoin was rare and was mainly concentrated in the region known as Bitcoin Beach, around El Zonte beach.
Bitcoin "didn't have the support we expected", Bukele himself admitted in an interview with Time magazine, published in August of that year.
A survey released in January 2025 by Iudop confirmed the low adoption: 91.8% of Salvadorans said they had not used cryptocurrency in the previous year. Of this group, 76.2% said they had never used bitcoin.
Although El Salvador recorded important progress in access to banking services last year, only four in ten Salvadorans over the age of 15 have a bank account, according to the World Bank's Global Findex 2025 survey.
Remittances and debt securities
The adoption of bitcoin has also had little impact on remittances sent by Salvadorans living abroad.
According to the most recent official data from the Central Reserve Bank of El Salvador, the amount sent through digital cryptocurrency wallets between January and April 2026 grew 44.3% compared to the same period of the previous year, reaching US$23.1 million.
Still, it represented just 0.7% of the US$3.286 billion sent to the country during this period.
Most of the money sent by Salvadorans living abroad, essential for the support of thousands of families in the country, continues to arrive through traditional means.
"The problem is that the proposal was based on a mistaken diagnosis," said Frank Muci, researcher at the School of Public Policy at the London School of Economics and Political Science (LSE, in the United Kingdom), in an interview with BBC News Mundo.
“What makes remittances expensive, with high fees, is, in part, the fact that the money is sent in cash in the USA and the recipients also want to receive it in cash,” explained the expert, who has already written several works on the adoption of bitcoin in El Salvador.
A CID-Gallup survey had already found, in 2022, that only one in five companies accepted bitcoin — Photo: NurPhoto via Getty Images
Muci defines the project as a big nothing burger, an expression in English used to describe something without importance or significant impact.
Regarding the supposed contribution of bitcoin to attracting tourists to the country, as claimed by cryptocurrency advocates, Muci considers that the effect is not "significant from a macroeconomic point of view".
“If you ask me what Bukele did that is really transforming tourism, I would say it was security policy,” says Muci.
With its "war on gangs", the Bukele government managed to drastically reduce the homicide rate, while at the same time transforming El Salvador into one of the countries with the highest incarceration rates in the world.
The sharp drop in violence contributed to Bukele's reelection in February 2024, with a landslide victory: the president received around 90% of the votes.
Unlike the security policy, the adoption of bitcoin was "a measure that generated hundreds of headlines, if not thousands, but that, in essence, had no result", continues Muci. "In addition to generating expenses with its implementation and scaring the markets, which for some time severely penalized El Salvador."
"Although the investment did not provide the return expected by the government, its profitability was also not far from what could have been obtained in the market if the money had been invested in another asset", says economist Carlos Acevedo — Photo: Bloomberg via Getty Images
"At least it is important to highlight that there was no loss of money", highlights Acevedo, from the Central Reserve Bank, referring to the bitcoins purchased by the government in recent years.
"Although the investment did not provide the return expected by the government, its profitability was also not far from what could have been obtained in the market if the money had been invested in another asset."
Until last Thursday (8/10), El Salvador accumulated 7,798.37 bitcoins, valued at US$636 million (R$3.17 billion), a value that fluctuates depending on the price of the cryptocurrency, according to the National Bitcoin Office, which publishes transactions in real time on its website.
But the so-called “volcano bonds” have not yet been issued, and the construction of Bitcoin City has not progressed either.
Samson Mow, executive director of JAN3, a bitcoin infrastructure company that helped devise the "volcano bonds", regrets that the plans never got off the ground.
"The positive side is that the government maintained the legislation on digital assets. With this, we created a regulated, prosperous and solid sector, which is growing very quickly," Mow told BBC News Mundo.
Although he acknowledges that he hasn't spoken to Bukele for a long time, Mow believes that the president "still trusts bitcoin."
"But he needs to reconcile this conviction with the demands of governing a country and with the pressures and conditions imposed by an institution like the International Monetary Fund (IMF) to release a large amount of resources for El Salvador", he highlights.
Pressure from the IMF
Amid the economic difficulties faced by El Salvador, the government closed, in December 2024, a US$1.4 billion (R$6.98 billion) financing agreement with the International Monetary Fund (IMF), under the condition of "reducing the risks associated with bitcoin".
The following month, without much publicity from the government, the Legislative Assembly approved changes to the Bitcoin Law.
With the amendment of six articles and the repeal of three others, cryptocurrency is no longer legal tender. Its use was restricted to transactions between citizens and private companies, and acceptance, previously mandatory, became voluntary.
In September, the government took another step to abandon the original plan to transform El Salvador into the “country of bitcoin”.
During the third assessment of compliance with the loan conditions, the payment of which would be made in installments, the government transferred "majority participation and control" of the state digital wallet Chivo to a "private company".
"The only thing transferred was the Chivo shares, something that had already been offered a year and a half ago, and not the strategic bitcoin reserve," wrote Bukele on the social network X, after several media outlets reported the transfer.
"Take the opportunity to read how El Salvador achieved a primary fiscal surplus and exceeded all expectations of economic growth thanks to security and investor confidence, in addition to achieving a significant reduction in poverty, favored by improvements in the efficiency of public services", he added.
Only last Thursday it was announced that the company responsible for the operation is Linguard Labs. However, it is not yet known which stake was acquired nor the value of the transaction. The Salvadoran State will continue as a shareholder and partner in the company.
The "public-private" partnership foresees the relaunch of the digital wallet with new
