According to figures compiled by Cornell University, El Salvador boasts one of the highest bitcoin ownership rates in the world, reaching over 70% at one point. Nonetheless, while these numbers may be accurate, the circumstances behind them need to be understood.
Bitcoin Ownership in El Salvador Gone Viral: The Truth Behind the Numbers
El Salvador and its bitcoin embrace, recently affected by compliance measures following a $1.4 billion credit facility deal completed with the International Monetary Fund (IMF), are again in the spotlight. Figures derived from a global bitcoin study by the Cornell Bitcoin Group, which put El Salvador at the highest position in the worldwide bitcoin ownership scale, went viral on social media, but there is a catch.
According to a recently released report, over 70% of all Salvadorans have owned bitcoin at some point, while nearly 30% currently own it. The numbers, that position the nation well over the adoption hotbeds, like Venezuela, have a specific context behind them that needs to be fleshed out.
While this might have happened, with bitcoin becoming legal tender pushed by President Nayib Bukele’s vision, what triggered this rise is the creation of Chivo Wallet and its associated introductory airdrop.
As part of a government initiative to introduce Salvadorans to bitcoin, Bukele sponsored a $30 KYC-protected airdrop to citizens, which allowed them to experience bitcoin for the first time. Even so, most users dropped bitcoin after cashing out.
A survey carried out by the U.S. National Bureau of Economic Research (NBER) found that 60% of all recipients of this incentive abandoned Chivo, which is now facing the chopping block, after receiving the airdrop.
Venezuela, which also boasts high levels of ownership, has a different set of key circumstances pushing adoption, including high inflation levels and currency devaluation, more akin to Argentina.
Bitcoin’s fallout in the country is also evidenced by the lack of adoption in a key use case: remittances. Even at its highest popularity, bitcoin failed to attain a significant share of the remittance market, with Salvadorans preferring traditional fiat-led alternatives. In June, these crypto flows represented less than 1% of the total remittance volumes.
Read more: Bitcoin Remittances to El Salvador Surge 300% Ahead of BTC Becoming Legal Tender
Read more: Crypto Remittances Fell Nearly 45% in El Salvador