It’s been five years since El Salvador became the first country to accept Bitcoin as legal tender.
President Nayeb Bukel announced the plan at the Bitcoin Conference in Miami on June 5, 2021 to cheers and applause from the Bitcoin community, who hailed the tiny Central American nation as living proof that BTC could be sovereign money.
Buckel sold the experiment as a way to reduce remittance costs and attract investment to the unbanked nation.
But five years later, who did the experiment benefit and what did it actually achieve?
Dr. Tobias Buss, a senior scientist at the University of Vienna who leads a research project examining the political economy of bitcoin in El Salvador, told the magazine:
“There is no doubt that the project was a failure if we take seriously the reasons given by Bukele for adopting it. Foreign direct investment in the sector has not increased, it has not effectively banked the unbanked and it is not widely used for remittances.”
Yet El Salvador’s Bitcoin bet has undoubtedly changed the conversation around the world’s number one cryptocurrency and turned nation-state adoption from a theoretical possibility into a living, breathing reality. Whether it succeeds or fails depends on what you think El Salvador is trying to achieve.
Five Years in El Salvador’s Bitcoin Bet
In a video message the game At Bitcoin 2021, Buckel said bitcoin adoption will create jobs in the short term and “help provide financial inclusion to thousands outside the formal economy.”
Today, evidence of mass adoption is hard to square with that ambition.
Research by Boos, Grigera and Schmid in 2025 found Salvadorans who adopted bitcoin tended to be younger, male, urban, more highly educated and, perhaps more importantly, already banked. Boos concluded that, “it was not widely accepted by citizens.”
El Salvador had the lowest level of banking access in the region at the time, with only 35.9% of people over 15 having a bank account in 2021, According to According to World Bank data.
Account ownership at a financial institution (% of population aged 15+) – El Salvador. Source: World Bank
Yet the government’s Chivo Bitcoin wallet did little to solve the problem: It could transfer funds to bank accounts, but did not remove the underlying barriers preventing unbanked Salvadorans from accessing the financial system in the first place.
According to Boos and his colleagues, the same problem arose with remittances, another pillar of Buckel’s pitch. In 2024, remittances accounted for about 24% of El Salvador’s gross domestic product, while the United States provided 98% of the total. But El Salvador adopted the USD as its official currency more than 20 years ago, and having most remittances come from a country with the same currency removes one of the major cost reductions that bitcoin could theoretically offer: currency conversion.
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Despite promises that bitcoin could make these transfers cheaper, remittances to crypto wallets accounted for just 1% by 2024, down from a peak of 1.7% in 2020-21.
This suggests that the government’s initial efforts to stimulate adoption failed to translate into sustained use. Chivo offered users $30 in bitcoins to sign up, but research by the National Bureau of Economic Research’s National Representative found Over 60% of early Chivo users never traded again after spending their free BTC.
Joe Nakamoto, a bitcoin-focused journalist who frequently reports from El Salvador, finds a similar disconnect on the ground.
In a recent video documenting one of his visits, he said He tested bitcoin acceptance in 21 stores in a San Salvador mall and found that only four accepted bitcoin, and only one did so smoothly. He told the magazine:
“It’s very, very difficult, borderline impossible, to truly live on Bitcoin in El Salvador. Unless you’re just eating pupusas on the beach in El Jonte, and then go to other Bitcoin circular economies and find solutions.”
When the IMF pulled the plug
The government has faced international pressure to back off from its bitcoin experiment. In December 2024, it reached a $1.4 billion financing agreement with the International Monetary Fund, under which it agreed to reduce its involvement in Bitcoin.
Salvador’s experiment with Bitcoin as legal tender. Source: NBER
There was agreement allowed In February 2025 and in January, the government amended its Bitcoin Act to make acceptance voluntary, to be taxed in US dollars, and to limit public sector involvement in Bitcoin-related activities, effectively destroying the most radical parts of Buckel’s test.
Although Bitcoin can still be used voluntarily, the state no longer forces businesses to accept it or use it as part of the country’s public financial system.
Later the IMF found That Bitcoin produced “no evidence” of a beneficial use case for the unbanked and had minimal impact on financial inclusion. Boos said:
“‘Soft adoption,’ as we noted in one of our articles, has never led to widespread adoption for payments. I’m not aware of any instances where taxes have been paid using bitcoin and the infrastructure remains largely unused.”
What has Bitcoin actually achieved?
If El Salvador failed to make bitcoin an everyday currency, it still managed something no country had done before: it made nation-state bitcoin adoption a reality.
Before 2021, the idea of governments accepting Bitcoin was still largely speculative; El Salvador has made it a reality. Samson Mo, CEO of bitcoin infrastructure firm JAN3, told the magazine:
“The question before every president or finance minister has shifted from whether a sovereign can hold bitcoin to why.”
The experiment catapulted El Salvador into the center of the global bitcoin movement, with many prominent bitcoiners including Max Keyser and Stacy Herbert making the bitcoin country their new home. Later Herbert becomes Director of El Salvador’s National Bitcoin Office, showing how closely related parts of the Bitcoin movement are to the government.
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Bitcoin Beach, a grassroots project in El Jonte that preceded the national experiment, is still one of the clearest examples of a functioning bitcoin economy, with local businesses, hotels and tourism operators continuing to accept bitcoin, even after the government voluntarily accepted it.
Nakamoto’s report documents several success stories for everyday Salvadorans, including Mama Rosa, who earns bitcoins from her pupusa stand, and Napo, who expanded from a taxi to a fleet.
Buckel’s government has even gone beyond holding BTC on its balance sheet or making it legal tender by promoting plans for Vulcano Bonds and Bitcoin City.
After repeated delays, the IMF agreement effectively advanced those projects, but the symbolic impact is still important. Mow explains:
“Bitcoin gets a proof of concept and El Salvador gains a global platform.”
There is an important difference between what El Salvador has achieved for Bitcoin and what Bitcoin has achieved for El Salvador.
Boos argues that the symbolic significance has largely been “for” the international Bitcoin community, rather than evidence of economic success in El Salvador. Nakamoto says:
“This looks more like a marketing campaign for foreigners than a real economic strategy for Salvadorans. It points to people with nice branding, passports and capital. Buckel is a razor-sharp operator. He knows exactly who’s watching and who’s clapping. Bitcoin is the country’s strategy, it’s not about breaking my heart for them.”
The Uncomfortable Part: Bitcoin and Buckel
Perhaps the most difficult question is what El Salvador’s bitcoin experiment says about the relationship between bitcoiners’ ideals of individual liberty and the government that imposes it.
IMF Executive Board approves 40-month fund facility. Source: IMF
Bukele has concentrated power during his time in office, and a state of emergency introduced in March 2022 to combat gang violence remains in place more than four years later.
Human Rights Watch said The government continued to remove checks on executive power, and local and international human rights groups did registered Widespread arbitrary detention and due process violations under the state of emergency.
But judging Buckel only through that lens misses why he remained so popular at home. El Salvador was once controlled by powerful gangs, with many Salvadorans living with daily threats of extortion, violence and death. Officially, the homicide rate fell from 53.1 per 100,000 people in 2025, to just 1.3 per 100,000 people in 2025.
Buckel’s crackdown has transformed public safety, and many Salvadorans see the trade-off between security and civil liberties very differently from critics abroad. Nakamoto says:
“This is a country with serious scars. Buckel saved the nation in many ways. He took out the gangs and he did wonders in putting it on the world map for Bitcoin.”
While Mow acknowledges the positive impact of Buckel’s gang crackdown, he says the wider impact of normalizing emergency powers cannot be ignored:
“In the hands of someone with restraint, those same powers can accomplish real things, like a crackdown on gangs in El Salvador. But it’s important to think ahead. What serves a leader with restraint can just as easily serve one without restraint once the guard changes.”
For bitcoiners, this leaves an uneasy tension. El Salvador’s bitcoin experiment has become inseparable from the government that made it possible and from a president whose record is far more complicated than bitcoin’s success story.
This may ultimately be the most difficult part of evaluating El Salvador for five years: Bitcoin has given Bukele a global platform, and Bukele has given Bitcoin something it never had before — a nation-state willing to put it at the center of its economic strategy.
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