In September 2021, El Salvador adopted Bitcoin as its second legally-recognized national currency alongside the U.S. dollar. It is the first nation to adopt the “Bitcoin Standard,” serving as a testing ground for other countries looking to adopt the digital currency as legal tender.
Most Western Bitcoin investors have a low-time preference for money and believe it will continue to go up in value. However, to the average Salvadoran worker, living hand-to-mouth without robust savings, do the decentralized benefits and future potential of Bitcoin present any real incremental value to them vs. using U.S. dollars?
During my first 48 hours in El Salvador, I experienced first-hand the restrictive frictional costs associated with fiat banking when traveling abroad. The ATM fees in San Salvador are higher than in the U.S. It costs $5 to $8 to withdraw money, and my bank flagged several of my transactions as being fraudulent, leading to my card being frozen twice.Bitcoin ATMs are not as commonplace as fiat ATMs here yet.