El Salvador Still in Economical Turmoil, Bitcoin Legal Tender Didn't Help!

However, while the deal held very lucrative prospects for the country, they have yet to be realized. The change in the legal tender has, for the time being, had no positive effects on the Salvadoran economy. As discussed below, this lack of change has left the country in economic turmoil.

Still in the Rapids

There has been no significant change in the economy of El Salvador despite legalizing bitcoin. The move proved to be a complex undertaking, with no fairy-tale ending in sight. Citizens are outraged by the proposed law, believing they will lose their money. Some citizens even ditched their national bitcoin wallets. Some of the factors that contributed to this are as follows:

The Global Crypto Dip

The crypto market has seen its prices drop significantly all over the world. This drop has become steeper in the last few months as several market issues spill over to the digital economy. The conflict between Russia and Ukraine, government regulation, and bans have negatively weighed on cryptocurrency prices. By integrating crypto assets into traditional financial markets, the coin's performance has also been tied to big corporations. Bitcoin prices have dropped significantly, with some experts such as Mark Mobius predicting that prices may drop to $10000.

Patchy Transition in El Salvador for Bitcoin Services

Many residents in El Salvador have faced several challenges in taking up the use of bitcoin services. Challenges such as access to bitcoin ATMs, access to bitcoin wallets, lack of adequate knowledge, and other technical issues have made many citizens wary of using the new system.

According to some citizens, savings stored in wallets have disappeared as the price of bitcoin dips even lower. The price shift has led to many citizens being skeptical of the bitcoin services around the country. Other citizens have experienced technical difficulty using bitcoin, and poor support by the wallets has only aggravated the situation. Through the lack of proper infrastructure and support, the attitude of citizens has shifted to the wariness of the system at best.

Uncertainty Over Possible Investments

The global crash affecting bitcoin prices has seen many individuals willing to sell off their digital assets. As a result, the relative stability present in the market has vanished. This air of uncertainty has reduced the possibility of wooing investors.

The number of businesses or upstarts willing to invest in crypto projects has tanked as risks quadrupled in the last few months. Thus, with the current socio-economic atmosphere, it is no surprise that investors are yet to flock and inject cash into the derelict economy of the bitcoin haven. This situation has left the country in a predicament as pessimism grows every day.

Bitcoin, the Better Option

Under president Bukele’s stewardship, the bitcoin ship set sail in June 2021. The move was set to cure some ills and pave a bright economic future for the country currently in debt. With a GDP of $54.6 billion, over 80% of the amount is directed toward debt. This economic position left the country in need of change as citizens suffered immensely under such conditions.

El Salvador's economy was in dire straits; the administration needed a lifeline. Thus, when bitcoin was introduced, many people joined the bandwagon projecting a positive outlook for the country’s economy. Bitcoin's use was to revive the crippling economy, attract investors and promote financial freedom. On top of these changes, legalization would stabilize and make life affordable and easier for citizens. This positive outlook on the crypto world has not come to fruition for El Salvador’s residents.

Wrapping Up!

Given that El Salvador legalized bitcoin as its currency, users have yet to see the positives of the move. Bitcoin was proposed as a cure for problems facing the Salvadoran economy and the way to economic success in the future. However, the adoption of bitcoin has been patchy as investors and citizens alike became weary of the risks posed by the crypto.

Similarly, bitcoin services have yet to iron out many issues, leading many to wonder if the positives once proposed are a myth. Therefore, while this standstill remains, El Salvador’s economy retains its derelict state. However, given that the transition is in its early stage, only time will tell if the crypto rallies will deliver the citizens the bright economic future they crave.