Digital Financial Revolution Wanes in El Salvador, Reveals US Study
In a surprising turn of events, El Salvador’s progressive step towards embracing Bitcoin as official currency is meeting resistance, as per a recent report by the US National Bureau of Investigation. The report, exclusively obtained by Reader Wall, examines the application and acceptance of El Salvador’s Chivo Wallet – a digital wallet app developed to enable transactions in Bitcoin and dollars. Despite an encouraging response initially, a worrying fall in its active users has triggered broader discussions over the feasibility of cryptocurrencies in everyday financial tasks.
The Attraction of Initial Offers
Booked as an incentive to drive mass usage, President Nayib Bukele offered a promotional bonus of $30 in Bitcoin to every citizen who downloaded the Chivo Wallet. This strategy worked well for a while, showing that sixty percent of El Salvador’s population downloaded the app. But the research suggests that only two-thirds of these initial users continued utilising the wallet once the initial bonus was exhausted.
A Downward Trajectory
Findings from the research document reveal that nearly forty percent of El Salvador’s populace downloaded the Chivo Wallet in September 2021. But this year has seen a significantly slower rate of downloads. Further scrutiny of the data reveals an even more unsettling trend: merely twenty percent of these users transact everyday activities like tax payment through the wallet. More shockingly, a meagre ten percent of the users switched from cash and cashless methods like credit or debit cards.
Lack of Faith Hindering Adoption
The dwindling usage of the Chivo Wallet can be traced back to the underlying lack of faith in the virtues of a digital financial setup, as well as Bitcoin itself. Despite strong endorsement from the government, traditional cash transactions still hold favourable over digital modes among the populace. This rooted apprehension towards unproven financial technologies and the unpredictability of Bitcoin captures the hurdles governments might face when implementing upheaving changes in fiscal structures.
