Businesses in El Salvador leave Bitcoin out of their plans for technological innovation.

Asian Trade TVSeptember 16, 2022

0 64 3 minutes read

Bitcoin doesn’t seem like a good way for the private sector of the Central American country to do business or make money.
Entrepreneurs are promoting an event about business innovation, but Bitcoin isn’t the main focus.
So far, studies show that cryptocurrency isn’t used much in day-to-day business.
Leonor Selva, who is the executive director of the National Association of Private Enterprise of El Salvador (ANEP), said that entrepreneurs in her country are working to make businesses more tech-savvy, but that Bitcoin (BTC) hasn’t been a part of this process.

Almost one year ago, El Salvador recognised BTC as legal tender. But neither people nor business owners have used cryptocurrency as a major way to invest or trade.

In an interview, Selva said that companies are “using Bitcoin less and less.” The executive said that Bitcoin “has not opened new markets or created more opportunities for economic revitalization as had been planned.”
Selva said that even though this is the case, the private sector continues to follow the “Bitcoin Law,” which says that businesses and companies must accept BTC as a form of payment.

Related: The price of Uniglo (GLO) is expected to rise quickly, while key levels of Arweave (AR), Holo (HOT), and Bitcoin Gold (BTG) are falling.

Without BTC, digital innovation

Leonor Selva’s comments about BTC came up because the business association is planning an event for October about business innovation and digital transformation. Several important business people from around the world are expected to be there.

Agustn Martnez, the president of ANEP, said that the purpose of the business meeting was to “promote change and show companies how to develop and implement a digital economy.” He said that to do this, it is important to know what the opportunities and problems are in the current economy. A year after it was legalised, most Salvadorans have negative things to say about Bitcoin. Carlos Acevedo, who was the former president of the Central Bank of El Salvador, agrees that the government’s main goals for the digital asset, which were financial inclusion and lowering the cost of sending money to El Salvador, have not been met.

Three U.S. economists did a survey in February, which was later published by the U.S. National Bureau of Economic Research. The survey found that only 10% of Salvadorans still use Bitcoin for daily transactions.

The study also showed that after spending the 30 dollars the government put into their Chivo digital wallet accounts as an incentive, 90% of Salvadorans stopped using the platform.

Fernando Alvarez, an economist at the University of Chicago and one of the study’s authors, told the New York Times, “The government gave this project all the momentum it could have gotten, but it still failed.” Research done by the Salvadoran Chamber of Commerce and Industry in March showed that only 14% of the country’s businesses had made transactions with BTC since it became legal in September 2021, and only 3% said they thought the cryptocurrency had any commercial value.

On the reverse

Even though businesses and people in El Salvador don’t seem to trust Bitcoin, President Nayib Bukele’s government shows no signs of wanting to change its cryptocurrency-focused economic policy.
The government hasn’t been able to get new investments based on the digital asset, which has made it hard to finish projects and issue the Volcano bonds that were supposed to come out.
Why it’s important

El Salvador is one of only two countries to have officially recognised Bitcoin as a legal currency, so the way it is used there has an effect on the global cryptocurrency market.
The government of El Salvador had to buy back its own debt because payment terms were set to end this year and there was no refinancing agreement with the International Monetary Fund.
On Monday, Bukele made an offer to buy back foreign debt with a maturity date between 2023 and 2025 for about $360 million USD. The El Salvadoran President made the announcement on his Twitter (NYSE:TWTR) account.