What happened?
El Salvador made global headlines in 2021 as the first nation to adopt Bitcoin as legal tender, but recent data shows that 89% of its registered Bitcoin service providers are now inactive. Out of 181 providers, only 20 remain operational, including the state-run Chivo Wallet and a few private companies. This decline raises concerns about the sustainability of the Bitcoin ecosystem in the country.
Who does this affect?
This situation primarily affects businesses and individuals involved in the cryptocurrency space in El Salvador, including Bitcoin service providers and users relying on their services. Additionally, it impacts the Salvadoran government, which has heavily invested in Bitcoin both financially and reputationally. The broader market may also watch these developments closely, as El Salvador’s initial move was seen as a potential model for other countries considering similar actions.
Why does this matter?
The high rate of inactive Bitcoin service providers represents a significant challenge to El Salvador’s efforts to establish itself as a leader in cryptocurrency adoption and could have far-reaching implications for its economy. If this trend continues, it may deter future investment in the country’s tech sector and impact President Bukele’s ambitions to position El Salvador as a regional tech hub. Furthermore, this could influence global perceptions of Bitcoin’s viability as legal tender and impact cryptocurrency markets by undermining investor confidence.