Three years after Bitcoin was established as the official currency in El Salvador, Napoleon Osorio is pleased to have been the first taxi driver to accept cryptocurrency payments, because since then his “life has changed.”
Thanks to the rise of Bitcoin on the markets, “now I have my own business,” the 39-year-old, who now supervises 21 drivers working under his “Bit-driver” brand, told AFP with a smile. He reinvested the profits he made in four vehicles that he rents out.
Napoleon Osorio says that if his “life has changed”, he owes it to the meeting in 2021 with the American John Dennehy, founder of the NGO My First Bitcoin, based in El Salvador. It was he who encouraged him to accept cryptocurrency payments.
Now divorced, Mr Osorio says his income allows him to easily finance the education of his two children, aged 13 and 19.
But not everyone made a fortune in El Salvador, the first country in the world to legally introduce bitcoin on the same level as the dollar, by decision of President Nayib Bukele.
On September 7, 2021, Mr. Bukele explained that he wanted to bank the 70% of the population who were on the fringes of the financial system, and began buying cryptocurrencies on behalf of the State.
Last March, the president claimed that El Salvador had acquired and stored 5,689 Bitcoin “in a cold wallet in a physical vault” in the country, worth $406.6 million at the time.
To encourage the use of Bitcoin, Mr. Bukele created a virtual wallet, the “Chivo Wallet,” and offered $30 to each user as a welcome gift.
But three years later, 88% of Salvadorans still do not use cryptocurrency, according to the latest survey by the University Institute of Public Opinion.
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In a recent interview with the American magazine Time, Mr. Bukele acknowledged that “Bitcoin has not been adopted as we expected.”
“The positive thing is that it is voluntary (…) we proposed it and those who wanted to use it did so and it was beneficial for them because of the increase in Bitcoin,” he added.
– “Fear of the new” –
The cryptocurrency was trading this week at over $52,000. It reached an all-time high on March 13, 2024, at $73,616, after plunging in November 2022 to $16,189.
“From the beginning, in our 2021 polls, it was clear that this was an incoherent measure, a measure that the population rejected,” the institute’s director, Laura Andrade, told AFP.
Independent economist César Villalona believes that the adoption of cryptocurrency “is not a failure.”
For Luis Contreras, from the NGO “Mi Primer Bitcoin” which has trained some 35,000 people in the country, the low use of Bitcoin is linked to a lack of knowledge in the use of cryptocurrencies.
“It’s the fear of novelty, the fear of technology (…) the fear of moving from the classic money of the current economy to a totally digital and decentralized money,” the 40-year-old instructor explained to AFP.
International monetary institutions have also been reluctant to establish a cryptocurrency as an official currency, and the International Monetary Fund (IMF) has always refused to grant a loan as requested by El Salvador.
But in August a preliminary agreement for a $1.3 billion loan was reached, although the IMF continued to stress that “potential risks” remained and needed to be mitigated.
In addition, the Fund asked Mr. Bukele to carry out a fiscal adjustment “in order to place public debt on a sustainable path,” which stood at 82% of GDP at the end of 2023.
With Bitcoin, Mr. Bukele also aimed to ensure that remittances from expatriate families, mainly in the United States and which represent a quarter of the country’s GDP, would no longer be subject to transnational taxes.
However, only 1% of remittances, which totaled $8.18 billion in 2023, were made in cryptocurrencies.
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