El Salvador’s population reject Bitcoin -UCA survey

Bitcoin (BTC) is suffering the rejection of Salvadorans, who disapproved of its implementation as legal tender in a survey released on Tuesday, October 18, by the University Institute of Public Opinion of the Central American University José Simeón Cañas (IUDOP/UCA).

65.5% of El Salvador’s population believes that bitcoin has been a failure as a legal tender; only 16.5% qualify it as a success.

The exercise was carried out in September, so it reflects the feelings one year after the deployment of this policy, said the rector of the UCA, Andreu Oliva.

On a scale of 0 to 10, where 10 is the highest, the population rated with an average score of 4.61 the decision of Nayib Bukele’s government to implement bitcoin in El Salvador.

Likewise, 77.1% of those surveyed said the government should no longer continue spending public money to buy bitcoin; only 2 out of 10 Salvadorans agree with this type of operation.

“This is the most unpopular measure of Nayib Bukele’s government, the most criticized, and the worst evaluated. 75.6% of the population says they have not used bitcoin, that is to say, 3/4 of the population rejects the use of bitcoin,” Oliva analyzed.

NO BENEFITS FROM BITCOIN

According to the IUDOP findings, bitcoin is most discredited by three groups: women, people who have worsened their family economy, and those who must lend money to meet their family expenses.

Bitcoin has also not improved the economy in households, with 77.2% staying the same and 17.8% saying it got worse since the bitcoin law; only 3% say it has managed to improve their conditions.

“It does not show that the implementation of bitcoin has improved their economy, only 3%, which we could say is a very similar number to the richest in our country,” Oliva posed.

The rector of the UCA revealed the negative effects of bitcoin in El Salvador: it has increased the country’s risk, the costs for the Salvadoran public debt, and awakened signals from international financial organizations for its implementation.

“It has also had an impact on decreasing the transparency index in the country, and the question we should ask is who is doing business with bitcoin. And if there is such a large opposition from the population to the use of bitcoin, why is this law not repealed?” he questioned.

MORE STUDIES

IUDOP surveyed between September 9 and 27, 2022, with a sample of 1,269 valid in-person interviews. The margin of error is plus or minus 2.75%, and the confidence level is 95%.

The adoption of bitcoin has been the subject of study in El Salvador. In September, a telephone survey by LPG Datos of La Prensa Gráfica found that 21.1% of Salvadorans accept bitcoin; while only 4% had transacted with Chivo Wallet -the state-owned digital wallet- in the week of the interview.

In April, the US National Bureau of Economic Research (NBER) found that 20% of Salvadorans continued to use Chivo Wallet after using the US$30 welcome bonus for downloading the app.

In March, 90% of businesses posited that crypto adoption had little or no impact on their sales, measured by the Chamber of Commerce and Industry of El Salvador.

HOW THE GOVERNMENT’S PORTFOLIO IS GOING

For its implementation, Bukele strongly promoted the adoption of bitcoin, and he has assured that its price will increase in the future.

As part of his strategy, he promised to build Bitcoin City, a special economic zone in the east of the country designed to attract investment in the sector.

Oliva pointed out that the government has gradually stopped addressing the bitcoin issue to the population, “although it maintains at the international level a discourse that bitcoin has not worked in El Salvador because the economic elites have boycotted it”.

Among the last words, Bukele addressed to bitcoin investors stand out his advice to face the bear market. To buyers, he advised them to enjoy life, stop looking at the charts, and confidently await a recovery in the future.

The last bitcoin purchase publicly announced by the Salvadoran government dates back to July 1 of this year, when it invested US$1.52 million to acquire 80 units. It brought the total number of bitcoins purchased by El Salvador to 2,381.

Government bitcoin purchases and sales remain under reserve, but Bukele has assured that no bitcoins have been sold.

From the limited public information, Bloomberg Linea estimates that the government has invested around US$105.1 million in buying bitcoin, at an average unit cost of US$44,156.

At the time of writing, the cryptocurrency was trading at over US$19,300 on the exchange Coinbase, making the Salvadoran government’s bitcoin portfolio worth some US$45.9 million, -56.2% below the amount invested.

Authorities have argued that Bitcoin has had positive effects, such as boosting tourism. The Ministry of Tourism estimates that 15% of tourism companies use bitcoin as a means of payment.

With information from Bloomberg