El Salvador’s Early Adoption of Digital Assets: The Persistence with A Sweet Payoffs

Nagaya Technologies
6 min readApr 20, 2024


Bitcoin has managed to turn attention once again in 2024 breaking records that were never thought possible when 2023 comes along. Bitcoin finally reclaim its peak from 2021 and institutions are lining up to be maximalist and reiterate their belief in Bitcoin. While Institutions like Blackrock and JPMorgan were in the spotlight lately within the DeFI Space, there were early adopters like El Salvador who seized the opportunity early and are currently reaping the rewards for its persistence. Let’s catch up with the current happenings of DeFI Space within El Salvador and the power of long term thinking!

EL Salvador the 2021 History Makers…..

2021 was a strange year for everybody involved within the DeFI Space as the world was in the midst of the pandemic while Bitcoin was on a roll never seen before. Fresh from a halving in Mid 2020, Bitcoin certainly managed to gather excitement and rejoice in a world filled with economic uncertainty & lockdowns. 2021 also has been the turning point where every Institutions and enthusiast start to realize the potential of Bitcoin and other digital assets.

Bitcoin reached its all time high of $69,000 in November 2021 while other digital assets such as Solana were posing 1000% returns on a Year on Year basis. The momentum was definitely high as the DeFI enthusiasts were growing in numbers due to the lockdowns and everybody wanted a piece of the opportunity. While countries like China decided to restrict any crypto related activities, the global world was heading to regulate the DeFI Space.

It was clear that Bitcoin and other Digital Assets despite their enormous growth were heading for a stern regulation that would put it in line with the current financial system but no one quite expected the initiative from El Salvador. El Salvador is a small country within the Caribbean with a population and land size not bigger than New York but in 2021 everyone within the DeFI Space has their spotlight on El Salvador.

Source: https://voi.id/teknologi/58386/imf-peringatkan-presiden-nayib-bukele-soal-adopsi-bitcoin-di-el-salvador

El Salvador officially became the history makers with its announcement in June 2021 when the country adopted Bitcoin as a “Legal Tender” beginning from September that year. This was quite an achievement for Bitcoin and other Digital Asset who finally achieved its potential as an efficient Digital Currency but it is also an achievement for the DeFI Space as adoption is not limited only to institutions or individuals with nations also keen to join in.

The announcement, though celebrated by many, was viewed as a bold bet taken from a country which houses more than 50% unbanked population. It also poses a logistical nightmare as deploying a system from scratch at national scale in just three months with no time for testing is a recipe for disaster. This was proven true as the system was unpopular with the people with the survey done in July, 49 percent of respondents were unsure how the bitcoin project would go while 29 percent were afraid.

Despite the early hurdles, Bitcoin adoption continues to be utilized along with the US Dollar as the official payment method around the country. Bitcoin Transactions are carried out nationwide mainly through the Chivo Wallet or 200 Bitcoin ATMs that are installed around the country. This initiative has placed the country amongst the top 3 for the Number of Bitcoin ATMs installed and amongst the top 20 in terms of adoption rate with close to 12% of the population utilizing Bitcoin.

The country is also experiencing major gains in terms of the popularity and tourism that Bitcoin adoption can bring with tourism up by 81% in 2022 compared to its pre pandemic levels. Bitcoin had also helped reduce the remittance fees by half and would be valuable in bringing more income to the country. If Salvadoran adoption of bitcoin for remittances accelerates at even just another 2% per year, the roughly $100 million spent on Bitcoin network infrastructure could effectively pay for itself in less than a decade.

El Salvador also continues to increase its involvement in the Bitcoin Space with the launch of the first Bitcoin Mining Farm within the country. The country also continues to rack up its Bitcoin reserves despite the dip accounting to more than 5,689 BTC and valued at more than $389 Million while it pledges to collect 1 Bitcoin a day ever since 2022. El Salvador also remains one of the biggest holders of Bitcoin globally and is massively gaining from the upward trajectory.

The breakthrough President Nayib Bukele was trying to create is also without its challenges as placing the country’s reserves on a volatile asset like Bitcoin will pose a significant challenge on the country’s financial outlook. Contrary to the perception of the DeFI Community, the majority of the population in El Salvador did not attribute an improvement in their well — being despite the adoption of Bitcoin in 2021. The Country also had issues to meet its short term obligations and had trouble negotiating with the IMF for a $1.3 Billion bailout.

Many would also point out the Bitcoin Experiment as a failure in 2023 as BTC value was faltering and 88% of the population chose to ignore it. It also didn’t help that the initiative behind the Bitcoin Law is seen as an authoritarian move that is reducing the judicial system within the country. Despite all that, President Nayib Bukele continues to be a popular figure with an approval rating of 93% and committed to the “Bitcoin Dream”.

Playing the Long Term Game

El Salvador’s move to adopt Bitcoin is filled with twists and turns across the 3 years it has been implemented and the spotlight continues to be on President Nayib Bukele. The Bitcoin Law seems like a failure during the winter phase of 2022 but it’s then a brilliant idea as Bitcoin value starts to go to the moon again. This kind of uncertainty the El Salvador economy is placed in remains a gamble for all the spectators watching.

Source: https://www.newslead.ng/2021/11/22/el-salvador-plans-first-bitcoin-city-backed-by-bitcoin-bonds/

On one hand Bitcoin was meant to free the interdependence of US Dollar within the El Salvador economy but on the other hand, the country is banking on Bitcoin’s continued success to survive. It also does not help that the nationwide Bitcoin rollout done by the government was ignored by the majority of its population who prefer to use cash instead. While backing a country’s reserves on a volatile asset might seem like a hasty move.

El Salvador is obviously putting its pieces to yield returns over the long term and so far in 2024 it has been rewarded for it. The country is currently sitting with more than $80 Million in unrealized profit should it decide to liquidate its reserve but nobody can predict how much that profit will continue to grow if Bitcoin continues on its upward trajectory towards the end of 2024. We may revisit and appreciate this historic move when Bitcoin breaks the 6 figure mark over the long run.

In a world where Bitcoin finally matures over the long term, it is the early adopters like El Salvador who can stand and possess magnificent growth within the future. The Bitcoin Law remains a bold bet for a country that is aiming to digitize its monetary system and so far they have been handsomely rewarded for their persistence. As the saying goes “Rome was not built in a day”, HODLing will be the term El Salvador needs at the moment with an exciting 2024 ahead of us!

We are at Nagaya Technologies Pte. Ltd are excited for the development that is taking shape around globally within different regions. The potential behind this great Blockchain Technology should be nurtured to be sustainable over the long run. This idea contributed to the creation of Nagaya as we understand the need to realize the potential of Blockchain technology with the support of Real World Matured Asset in order to provide sustainability over the long run. Nagaya becoming the World’s First Hybrid Digital Asset continues our commitment to expand real-life adoption of Blockchain Technology. Intrigued to know more about the Nagaya journey, you can read our whitepaper through our official website at www.nagaya.co

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