El Salvador’s bold experiment to make bitcoin legal tender has officially come to an end.

Science · Published 20 October 2026 Swipe more like this →

In short: In 2021, El Salvador became the first nation to adopt bitcoin as legal tender, aiming to modernize its economy and boost remittances. By 2025, the policy was rescinded after research revealed minimal public usage and significant economic costs. The project remains a cautionary tale of top-down digital financial reform.

The initiative began in June 2021 when President Nayib Bukele announced the Bitcoin Law, which the Legislative Assembly passed with 62 of 84 votes. The government launched the Chivo wallet, incentivizing adoption with a $30 sign-on bonus, and mandated that businesses accept the cryptocurrency. Proponents argued this would lower remittance costs and provide banking access to the underbanked, while critics warned of volatility, environmental damage, and a lack of transparency regarding the government's fiscal policies.

Despite the government's aggressive promotion, mass adoption never materialized. Surveys from the Central American University showed that by 2024, only 8.1% of Salvadorans used bitcoin for transactions, down from 25.7% in 2021. Many users abandoned the Chivo app immediately after claiming their sign-on bonuses. Furthermore, the government's heavy investment in bitcoin—spending roughly $85.5 million between September 2021 and January 2022—exposed the national reserves to extreme market swings, leading to significant paper losses during the 2022 crash.

Environmental concerns also plagued the project. Critics highlighted the massive energy requirements of bitcoin mining, noting that in October 2021, global mining consumption was 13 times El Salvador's annual energy usage. Plans to leverage geothermal energy from volcanoes faced backlash due to water scarcity and the high volume of electronic waste generated by mining hardware. By March 2025, following an agreement with the International Monetary Fund for a $1.4 billion loan, the government officially rescinded bitcoin as legal tender, winding down the Chivo wallet and ending mandatory merchant acceptance.

The failure of the experiment highlights the friction between digital-asset theory and economic reality. While the government sought to attract foreign capital and modernize the financial system, the lack of digital literacy and the volatility of the asset created more instability than growth. Ultimately, the experiment failed to replace the US dollar, which has been the official currency since 2001, as the preferred medium for the Salvadoran population.

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