El Salvador made history when it first adopted Bitcoin as a legal tender back in 2021. At the time, the President of El Salvador Nayib Bukele revealed his dream to transform the country into a cryptocurrency friendly tax haven. When he announced plans for “Bitcoin City” it sparked a wave of Bitcoin enthusiasts tourism. According to reports, Bukele’s plans include a city powered by geothermal energy offering a cryptocurrency tax-free haven for Bitcoin investors. El Salvador launched its own app called “Chivo Wallet” designed to offer benefits akin to a Central Bank Digital Currency (CBDC). The development of this government based app has been met with a lack of enthusiasm. According to Yale Insights, people were willing to download the app but hesitated when it came to actually using it.
The researchers were impressed by how many people were aware of and downloaded the app: almost 68 percent of potential users knew about Chivo Wallet; 78 percent of that group at least tried to download it. But from there, the numbers declined drastically. Despite incentives by the government—including a $30 Bitcoin bonus, a discount on gas when bought with the Chivo Wallet, and the elimination of certain transactional fees—almost 20% of people who downloaded the app hadn’t used their bonus by the time of the survey and most people who spent their bonus didn’t continue to use the app after doing so.
Further, more than 20% of people surveyed knew about the app but did not try to download it. The authors had expected that people might be skeptical of Bitcoin because of the volatility (and therefore risk) of cryptocurrencies in general. But instead, people shared that they did not trust the app or Bitcoin because they are not anonymous, as cash is. The latter explains why Chivo Wallet was not even used to conduct transactions in dollars. These are important findings for policymakers looking to adopt digital currencies in their own countries: like Chivo Wallet, any digital currency will require governments to keep a record of users and their transactions; if people don’t trust the government or the technology, they won’t use it.
From : Yale Insights Research El Salvador Adopted Bitcoin as an Official Currency; Salvadorans Mostly Shrugged – https://insights.som.yale.edu/insights/el-salvador-adopted-bitcoin-as-an-official-currency-salvadorans-mostly-shrugged