Back in 2021, El Salvador was the first nation to adopt Bitcoin (BTC) as legal tender. After enacting the law, the government made their own Bitcoin investment, and directed businesses to accept it as an alternative form of payment.
Forcing businesses to accept Bitcoin was a controversial decision made by Salvadoran president Nayib Bukele, as cryptocurrency was always supposed to be a voluntarily movement, whereby merchants and consumers would adopt it of their own accord.
And in an ideal world, that is exactly what would happen. Everyone would recognize the problems with the traditional financial system, and willingly adopt cryptocurrency. But the truth is that sometimes people need a gentle push when it comes to using new technology.
Although many crypto purists would likely be in opposition to the state's decree, we cannot deny the fact that the democratically elected government's decision to make Bitcoin legal tender has given it more legitimacy among the people, and therefore citizens here are more open to learning about it, and eventually integrating it into their daily lives.
Currently, and hopefully at no point in the future, there is no "Bitcoin police" in the streets of El Salvador, ensuring that businesses are accepting Bitcoin. From my own experience, it is merely an alternative form of payment that businesses can legally accept if they choose to do so.
And as of right now, the answer to "do you accept Bitcoin" is usually a polite "no". A lot of businesses will tell you that they still haven't integrated Bitcoin payments at their store, or that their Bitcoin wallet is nowhere to be found, or that it's out of order for some reason. That said, there are still quite a few shops around the country that do accept it.
In fact, just the other day I stumbled upon a new restaurant that had a small sign posted, indicating that they accept Bitcoin. I confirmed with the waiter before ordering that this was indeed the case. When the time came to pay though, they had to charge the smartphone that accepts Bitcoin payments, as the battery had died.
After a few minutes, the device was powered on, and we managed to successfully make a Bitcoin lightning payment.
As you can see, almost nobody is using Bitcoin to pay for goods and services here, aside from BTC tourists. The reality on the ground is that the majority still prefer to pay with dollars, which is the other form of legal tender in El Salvador.
I have to say that the effort Salvadorans have put into integrated Bitcoin into their businesses is admirable, and store employees are always respectful and helpful when you ask about Bitcoin payments. Despite a lack of formal education in cryptocurrency, the people are doing their best to figure it out.
So while businesses are legally required to accept Bitcoin, the reality is that with so few people paying with Bitcoin, there's no reason for businesses to keep their Bitcoin-enabled smartphones and tablets charged and up to date.
For now, the majority of people still see Bitcoin as a strange and risky investment, not as a method of payment. I believe that neither businesses nor consumers will want to receive or pay with Bitcoin until there are serious problems with the dollar.
And as of now, the dollar is still the most stable currency worldwide and the people are used to paying with it. In other countries like Argentina and Venezuela, where hyperinflation has destroyed their national currencies, the people prefer dollars as well, often in the form of stablecoins.
That said, the dollar is facing some serious issues, and we should be preparing for its ultimate demise. As one alternative, Bitcoin is the first truly unconfiscatable asset that is limited in supply and presents no counter-party risk, meaning it is completely under your control if you own the seed phrase.
Although difficult to predict the timing, the dollar will ultimately be replaced by a combination of CBDCs, Bitcoin, and other cryptocurrencies. The earlier we learn how to transact with one another using cryptocurrencies, the better off we will be in the future.
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Until next time...