The short answer is no. Well, the vast majority of Salvadorans don’t use it due to many reasons and the majority of the small percentage of people who use it convert their payments in Bitcoin to USD.
In 2021 when Bitcoin was announced as legal tender, the only ones who thought it was a great idea were the people around the world that were into Bitcoin and the very small percentage of Salvadorans who knew about it.
Nowadays you can see people talking about El Salvador as “The Bitcoin Country”, you can even see that at the Airport. However, how true is this? Are Salvadorans really into Bitcoin? Does El Salvador have a Bitcoin circular economy? Can you truly live the Bitcoin Standard here?
Why “We Accept Bitcoin” Stickers Are Fading
You can see stores with the sticker “We Accept Bitcoin Here” but when you try to pay, now they say they don’t accept it anymore. This happened due to the change in law that happened recently where Bitcoin is not a legal tender anymore and now business owners are not obliged to accept Bitcoin as a payment method.
When Bitcoin was announced as Legal Tender, many speculations and false news came to light. “Salaries are going to be paid in Bitcoin from now on”, “Bitcoin price may vary so you may receive less money than what you expected” and many more.
Even when Chivo Wallet was announced, the government offered $30USD to be added to each new user at the moment they created their account. Bars, nightclubs, restaurants and many other businesses started with different campaigns to have people spend those 30USD, it worked.
The Deeper Issue: Financial Education and Mindset
Financial education in El Salvador is very low, people do not live, they survive and it is not entirely their fault. The past of the country has been marked by many aggressive incidents that led people without the opportunity to grow.
The fact that they receive the paycheck and the next day it’s gone in loans, credit card payments, on some luxury expenses or even just on going out for some drinks. The mindset of “That’s what I work for” is dominant in the majority of people. Therefore, do they really have the will to learn about Bitcoin?
If you research Bitcoin, it is because you are truly interested, not because it’s something you have to do because someone imposed it. Just like when we were kids, we were given books to read which we found boring, but now, if you go to the bookstore and find a book that calls your attention, you find it interesting.
Why Cash is Still King in El Salvador
Approximately 70% of Salvadorans do not have a bank account, a statistic consistently reported across multiple sources. People are still very attached to cash currency because it has been taught like that for ages, parents teaching kids that if they have their money in the bank, it’s going to be stolen.
So my parents grew up with that mindset and many business owners and small entrepreneurs think the same, if you approach a store, they don’t accept any other payment method than just cash.
There are some new small businesses owned by the younger generation and they do accept bank transfers, but not more than that. In the area where I live there are around 20 small businesses where the majority are convenience stores or “tienda de la esquina” as we call them in El Salvador.
Out of the 20, only around 3 accept bank transfers and only 2 accept card payments. The majority don’t even dare to accept anything other than cash.
So, in El Salvador cash is king. Buses, Taxis, Food stalls, street vendors, you name it, cash is the most accepted and preferred payment method. So, where’s Bitcoin?
The Perception Problem: “Bitcoin is Only for the Rich”
Regular Salvadorans have a very vague idea of what Bitcoin is, some of them think that it is only for the rich people because they see only foreigners and wealthy people talking about Bitcoin, which.. is kinda true.
Not going to lie, just look at the kind of people here in El Salvador that are famous and talk about Bitcoin, Max Keiser for example. So, Salvadorans say: “Bitcoin is only for the wealthy people, I don’t need to nor want to learn about it”.
They do not want to give it a chance because there are no easy access videos or information that says that you can start using Bitcoin without a lot of money.
You have projects like Mi Primer Bitcoin and Bitcoin Beach that focus on teaching about Bitcoin to people. I know and have seen their work and it is wonderful, many people are now accessing the information that was needed about Bitcoin, however, changes are not seen from one day to another.
It may take some years to see Salvadorans truly interested in Bitcoin, just like what happened in the world, Bitcoin was not that known when it started, it was not until recently that everybody talks about it.
What about the Bitcoin Standard? Well, no. I know there are some places like Berlin in Usulutan where you can do mostly everything with Bitcoin, which is fantastic, however, outside the small town, not so much.
So, Where Can You Actually Use Bitcoin?
Ok, it’s not that you cannot pay with Bitcoin anywhere, it is just some selected spots that still accept Bitcoin, big companies like Siman (a department store), Super Selectos (supermarket), Walmart and other big brands, they still accept Bitcoin.
If you go downtown and ask Salvadorans about what Bitcoin is, they may have an answer, but if you go to other places, fancy places, you may find people truly involved in it.
You may find Bitcoiners living in San Blas or very fancy areas in San Salvador. Some stores do accept Bitcoin so it should not be very complicated. However, if you want to and need to get some cash, you can easily do it with Chivo Wallet (if you know someone with the app) or Athena ATMs.
Chivo ATMs have no fees, so you can withdraw money from the Chivo Wallet App, but you need someone who has the app to use them properly. Athena supports any wallet, so there should not be any problem but fees are high.
What About the “Bitcoin-Friendly” Apps?
Apps like DitoBanx tried to make Bitcoin more accessible by offering a rechargeable Mastercard Card to the users. Salvadorans can easily receive Bitcoin via Lightning or On Chain and top up the Card by converting BTC to USDC and use that to top up the card so you can use it wherever you go.
It seemed like the best option and many people started using it, but with time, its use has been decreasing because there are other options that do a better job in attracting users to keep using FIAT.
Nor Chivo Wallet, nor DitoBanx were able to make Bitcoin more attractive to Salvadorans. This is because, as previously mentioned, not everyone has a bank account and financial literacy percentage is very low.
Then, trying to make someone who has only used cash to use “the solution for every problem” (as some people call Bitcoin when trying to convince others to use it) is not a good idea.
The Rise of Cashback: Why N1co Succeeded Where Bitcoin Failed
Recently there was an app called N1co that was launched with something that is very attractive to people, “Cashback”. Salvadorans can get 1% cashback on all purchases and N1co has partnered with some local businesses to offer a higher Cashback percentage on certain days and hours of the week. This makes the app really interesting for many, even for me, not going to lie, it’s my preferred payment method.
It gives you a Visa digital and physical rechargeable card to use wherever you want and with no restrictions.
I use this app on all my purchases and bill payments because it gives me some percentage in return, unlike Bitcoin where I have to pay small fees. And this is where the problem lies, people don’t want to pay more, not even a penny of fees.
N1co offers you cashback on your purchases and sometimes you can even get 15% cashback in some selected places. For someone who is not much interested in learning how money works, this is a top notch offer, which, let’s be honest, is for the salvadoran economy.
Something that not many people know is that you can top up your N1co account using Bitrefill and this makes things easier for Salvadorans who own Bitcoin and need to spend it using cash.
Then UglyCash appeared, at the beginning the app was booming, and got to be the number 1 in downloads in the Play Store and the App Store. However, just like DitoBanx, people use it less.
This is because the app is mostly for people who receive payments or remittances from the US where it gives you a US bank account number and also you can transfer money within the app at no fees.
At the beginning it was attractive because you could get 5% cashback in all your purchases and it was given to you in RSR (Reserve Protocol), and then you could convert it to USDT so you could use it as your funds.
So it is a bit more complex to understand completely. Unless a Salvadoran receives remittances or payments from the US, UglyCash is not that good in El Salvador because now Salvadorans have to pay fees to top up the account with cash or from a bank transfer.
Just like those apps, there are many more, NIU, NEQUI or KASH, those three from different banks. Even with many apps on the market, many Salvadorans still prefer to use cash as the main payment method. Of course, some business owners have adapted to these new ways and they accept payments with those apps which makes things easier.
The Reality: A Cash-Based Economy in Transition
El Salvador is still a very cash-based economy. I still have to use cash even though I try not to. I always bring at least one to five dollars in cash with me just in case, most of my payments are done with a card.
The change may take some years, that’s why you may still see that it is very difficult to find small businesses that accept cards and even worse, Bitcoin.
It is just a matter of time for them to adjust and see the benefits of it, I understand them because I come from that world where I had my piggy bank filled with cash.
Not understanding that saving money is a waste of time if it doesn’t move and loses value because of inflation, that is what makes this economy be stuck.
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