Reflections on El Salvador’s Journey with Bitcoin

In late August, I visited El Salvador for the first time, and honestly, I wasn’t sure what to expect. The media, both conservative and liberal, had set high expectations regarding President Nayib Bukele’s aggressive stance on crime. But, within a few hours, I began to see the truth in those reports. Once notorious for violence and gang activity, El Salvador now felt surprisingly peaceful.

There’s certainly a lot written about Bukele’s crackdown on crime, and he deserves commendation for transforming his country. However, this success somewhat obscures his other initiatives, like the Bitcoin adoption program, which is also significant.

Back in September 2021, El Salvador made headlines by becoming the first nation to embrace Bitcoin as legal tender, requiring businesses to accept cryptocurrency. This excited Bitcoin supporters in the West, yet many Salvadorans, especially those accustomed to cash, were skeptical.

“I think it’s tough to handle tax liabilities tied to Bitcoin,” one local mentioned, and this sentiment seemed to resonate with others as well. Over time, it became clear that the Bitcoin initiative didn’t quite live up to the lofty expectations. In an August 2024 interview with Time, President Bukele acknowledged this reality.

“Bitcoin hasn’t been adopted as widely as we hoped. While many Salvadorans are using it, the biggest companies are on board, and places like McDonald’s and supermarkets accept it, we didn’t see the surge in usage we wanted. The upside is, it’s been voluntary. We’ve let people choose, and those who did have seen Bitcoin’s value rise.”

But it wasn’t until the International Monetary Fund (IMF) intervened that the government had to take a step back from the Bitcoin program. As part of a $1.4 billion support deal, the IMF requested that El Salvador remove Bitcoin as a legal currency. Accepting these terms, Bukele’s administration amended the Bitcoin Act in February 2025, switching to a more limited, voluntary private sector cryptocurrency strategy.

So, was the Bitcoin experiment in El Salvador a triumph? Well, that’s up for debate.

Firsthand Experiences

Upon arriving in El Salvador, I bought into the narrative surrounding the Bitcoin push. Surprisingly, when I talked to locals, many didn’t share that enthusiasm.

“It’s pretty cool,” mused Jake Hamilton, an American programmer who splits his time between Austin and San Salvador. “You can pay with Bitcoin at beach shacks in Surf City.”

Jake’s passion for this digital currency is notable. He isn’t just a casual fan; it’s intricately linked to his professional and social life. His endorsement of El Salvador’s Bitcoin initiative carries weight.

His journey with Bitcoin started in 2015 when he was studying philosophy. He attended a seminar that, to his surprise, was eye-opening. “The discussion was right on—it was about how Bitcoin represents real philosophical change in the world,” he recounted.

After that, he moved to New York, tackled a coding bootcamp, and eventually ventured into Central America, arriving in El Salvador around the time of Bukele’s special operation. The atmosphere was electric, and Jake witnessed firsthand a transformation, though, admittedly, it was Bitcoin that initially attracted him, following conversations with several Western lawyers suggesting something transformative was brewing.

Although Bukele hadn’t signed the Bitcoin Act until June 2021, a budding crypto scene already existed. Jake shared that an anonymous benefactor had donated $100,000 in Bitcoin to establish a circular economy in a small town, which began paving the way for tourists and crypto enthusiasts.

As time passed, Jake’s fondness for El Salvador deepened. When he’s not in Austin working with blockchain, he’s often surfing, hiking, or mingling with the local elite. He’s become somewhat influential among expatriates and even holds a lease at the high-profile Palesta Mansion, a sprawling house that overlooks San Salvador.

A Surprising Hub

During my trip, I visited the mansion multiple times and couldn’t help but admire the vibrant life it held. The night after a big meeting, standing on the patio surrounded by captivating company, I marveled at how this small Latin American nation had turned into a gathering place for unconventional right-wing thinkers. Bitcoin, for sure, plays a hefty role in this transformation.

Yet, Jake also recognized the pitfalls. “Negotiating with the IMF was no walk in the park. Tax liabilities around Bitcoin payments are a challenge,” he reflected. Plus, given the average monthly income hovers around $400, teaching the intricacies of crypto could prove difficult.

Although El Salvador rolled back its Bitcoin acceptance as legal tender, few other nations made real strides in Bitcoin integration. Jake mentioned Costa Rica’s unofficial “Bitcoin Jungle,” but nothing seems to hold a candle to El Salvador’s pioneering efforts.

Was the Bitcoin initiative a failure, as many sources suggest? It’s complicated. Yes, removal from the legal tender status shows some setbacks. Still, El Salvador remains the most advanced in Bitcoin integration globally.

Since the IMF deal, the country has continued its Bitcoin investments. It hosted the largest cryptocurrency conference in Central America and passed legislation allowing banks to manage Bitcoin. Even geothermal energy harnessed from volcanoes is being used for Bitcoin mining.

Bitcoin is still very much alive in El Salvador, perhaps even thriving. While it may have lost its fiat status, it hasn’t diminished its presence or potential. Instead, it seems like a shift in focus, where crypto usage offers more opportunities than ever before.