Salvadoran Companies Remove Bitcoin From Their Tech Innovation Plans By DailyCoin

© Reuters Salvadoran companies remove Bitcoin from their technology innovation plans
  • It does not appear to be a viable commercial or financial tool for the private sector in the Central American country.
  • Entrepreneurs are promoting a business innovation event in which Bitcoin is not the central focus.
  • Studies carried out so far have revealed a decrease in the use of cryptocurrency in daily business operations.

ANEP Executive Director Leonor Silva stated that entrepreneurs in her country are working towards the technological transformation of companies, but highlighted that Bitcoin (BTC) did not appear in the process.

About a year ago, El Salvador recognized BTC as legal tender. However, neither citizens nor entrepreneurs have embraced cryptocurrency as a major investment or trading asset.

In an interview, Silva commented that companies are currently undergoing a “bitcoin reduction.” According to the CEO, bitcoin “has not been getting the results of opening new markets or generating more opportunities for economic revitalization as has been suggested.”

Despite this, the private sector continues to comply with the “Bitcoin Act,” which requires businesses and corporations to accept BTC as a form of payment, Silva explained.

Digital innovation without BTC

Leonor Silva’s comments on BTC originated in connection with an event on business innovation and digital transformation, organized by the Business Association in October. A number of relevant international business figures are expected to participate in the proceedings.

The president of ANEP, Agustín Martínez, explained that the business meeting “is aimed at promoting changes and guiding companies on what needs to be done to develop and implement the digital economy.” He emphasized that, for this purpose, it is necessary to identify the opportunities and challenges faced by the current economy. The overall evaluation of Bitcoin by Salvadoran individuals a year after its approval was generally negative. Former President of the Central Bank of El Salvador Carlos Acevedo confirmed the feeling that the digital asset has failed to achieve the main goals promised by the government; Those related to financial inclusion and reducing the cost of sending remittances to El Salvador.

A survey conducted by three US economists in February, and subsequently published by the US National Bureau of Economic Research, found that only 10% of Salvadorans continue to use bitcoin in daily operations.

The study also highlighted that after spending a $30 stimulus deposited by the government into Chivo digital wallet accounts, 90% of Salvadorans stopped making transactions on the platform.

“The government gave this project all the momentum that could be expected, and it still failed,” one of the study’s authors, University of Chicago economist Fernando Alvarez, told the New York Times. Research conducted by the Salvadoran Chamber of Commerce and Industry in March revealed that only 14% of the country’s companies have conducted transactions with BTC since its approval in September 2021, while only 3% reported any perceived commercial value for the cryptocurrency.

on the flip side

  • Although companies and residents of El Salvador seem to have little faith in Bitcoin, the government of President Nepe Bukele is showing no signs of intent to change its crypto-centric economic policy.
  • The government was unable to attract new investments based on digital assets, which made it difficult to implement projects and launch the expected Vulcano bonds.

Why should you care

  • As one of two governments to officially adopt BTC as legal tender, the impact of cryptocurrency use in El Salvador is having an impact on the global crypto market.
  • The Salvadoran government has had to buy up its debt to reduce the financial pressure caused by the looming expiration of repayment terms this year, and the lack of a refinancing agreement with the International Monetary Fund.

On Monday the 12th, Bukele proposed an offer to buy back foreign debt maturing between 2023 and 2025, for approximately US$360 million. The announcement was made via the Twitter account (NYSE) of the President of El Salvador.

For more information on the adoption and use of Bitcoin in El Salvador, see the following articles:

Bitcoin & Surf: Reviving Bitcoin-Powered Tourism in El Salvador

El Salvador Buys Back Its Debt Ahead of Bitcoin (BTC) Bond Release

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