From a newsletter today and a section that was titled "The Spectacular Failure":<p>"It has been more than a year since El Salvador became the first country to make bitcoin legal tender under the Bitcoin Law came.<p>The one-year update on how the law fared:<p>- Adoption and use of Bitcoin has remained low as the currency has lost about 60% of its value since the experiment started.<p>- Very few businesses accept payment in cryptocurrency, and even fewer Salvadorans wish to pay in the digital token.<p>A survey by the El Instituto de Opinion Publica found that 76 out of 100 small and medium-size enterprises in El Salvador do not accept bitcoin payments. Another survey published in March by the Chamber of Commerce and Industry of El Salvador found that 86% of businesses have never made a sale in bitcoin, and only 20% of businesses take bitcoin, despite the Law’s mandate that all merchants accept the cryptocurrency.<p>In Short: $60 million lost, $375 million spent, and little to show for. The Bitcoin experiment was a spectacular failure."<p>What do you think? What was planned and why this happened?
I am not a crypto expert and I don’t have treasury operations experience in a company that has direct exposure to a developing countries issues.<p>I do have experience doing treasury ops work though and I will say the 2 biggest things you look for in the currency you do treasury operations in is a) stability and b) access to normal financial rails.<p>Nothing currently beats the usd on either count and that’s the currency of exchange in El Salvador. Because of that there is no incentive for businesses to change their currency of account. And if uptake on the consumer side is low there is no reason at all to accept a new currency.<p>You might as well ask why the Japanese yen hasn’t had significant uptake. It’s the same problem as Bitcoin but at least it’s (relatively) stable and has well paved financial rails.<p>Even the Chinese yuan hasn’t made a dent in currency of account. Why would Bitcoin?
1) I'd say that "failure" is an imprecise label for an on-going change. A better label is a "work-in-progress experiment" that hasn't panned out yet.<p>2) Changing the default way of doing business takes time. It took credit cards many years to replace cash and checks as the most common payment methods. There's smart technical people on HN who still barely understand the social and economic implications of crypto despite fully understanding the technology...and most people barely understand anything about crypto. It might take years to start to find traction among a general population. Declaring it done just 1 year into it is very premature.<p>3) Will it succeed? Who knows, but I'd argue that a country in El Salvador's position is 100% right for taking that approach to their economic development given how difficult it might be to bring industry and business to their country otherwise.<p>4) I don't follow El Salvador politics too closely, but it seems like their president isn't just a one-trick pony who is only doing the crypto stuff. There's big work there but he's also trying to do stuff to fix crime and corruption and other changes that could help. I've heard mixed results on him, but again I'm not an expert on the country.
It's only been a year, and per your own source there's already upwards of 20% adoption. Seems rather premature to declare it to be a failure.