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Bitcoin’s (BTC-USD) use as a medium of exchange in El Salvador, the first-ever country to adopt the most popular cryptocurrency as legal tender, appears to be off to a rough start due to an overall lack of trust in bitcoin and the government’s BTC wallet dubbed Chivo, according to a recent survey by the U.S. National Bureau of Economic Research.
The survey data was based on face-to-face interviews with 1,800 Salvadorian households.
There has been a growing debate on the potential for bitcoin (BTC-USD) to replace the U.S. dollar as the world reserve currency. In a free market, a currency is defined as a form of money that acts as a medium of exchange, unit of account and store of value. Some argue that the U.S. dollar and other fiat currencies generally do poor jobs of protecting consumers’ purchasing power, while others suggest the opposite. And as consumer price inflation reached a 40-year high, that debate has become even more heated, especially as a slew of businesses over the past two years have taken on crypto for a variety of use cases. While early bitcoin fans touted the tokens’ decentralized properties, the population at large may not trust it unless it’s being facilitated under a single regulatory regime.
Bitcoin adoption falters in El Salvador:
For some context, El Salvador’s Chivo wallet quickly lost popularity after its rollout in September 2021. NBER’s survey found that just 20% of respondents in the nation used Chivo after downloading it. 40% of all downloads occurred in September of last year and “virtually no downloads have taken place in 2022.” It seems that people were incentivized to download Chivo given the $30 bonus offered by the government, hence the saturated influx of downloads at the onset of the Chivo launch, the NBER explained.
“The most important reason not to download the app, conditional on knowing about it, is that users prefer to use cash, which was followed by trust…
