A look at El Salvador's adoption of bitcoin as a national currency on Sept. 7, by giving citizens $30 to sign up for its Chivo wallet, and potential issues
Wall Street Journal : Tweets: @tunkuv , @chris2pherchase , @byheatherlong , @scottlincicome , and @ceostroff Tweets: Tunku Varadarajan / @tunkuv : “Adopting bitcoin as legal tender puts us on a roller coaster”: El Salvador is about to embark on a cryptocurrency experiment that risks wrecking its economy. https://www.wsj.com/... via @WSJ @chris2pherchase : That is some kind of bribe. Will be interesting to see the data and if El Salvadorians treat BTC like every other nation/person, as a store of value and not medium of exchange. Hodl no spendl https://twitter.com/... Heather Long / @byheatherlong : El Salvador will make Bitcoin its official currency on September 7 (alongside the US dollar). Salvadorans who sign up for a new e-wallet will get $30 The nation hopes to: 1) Attract more foreign investment 2) Attract more remittances https://www.wsj.com/... Scott Lincicome / @scottlincicome : “The 40-year-old president also wants to lure foreign investors to develop geothermal power from volcanoes to supply the large amounts of electricity needed for mining the cryptocurrency.” https://www.wsj.com/... Caitlin Ostroff / @ceostroff : In less than two weeks, El Salvador will become the first country to adopt bitcoin as a national currency. No one knows what comes next. w/@PerezEnMexico https://www.wsj.com/...
Context & Ripple Effects
This story lands two weeks before launch day. In June, President Bukele unveiled the bill making bitcoin legal tender, built on a payments partnership with US startup Strike, framing adoption as a way to cut remittance costs and attract foreign investment — including geothermal-powered mining. Days later, reporting surfaced that Strike was only licensed in one US state, raising questions about whether its transfer corridor to El Salvador was even lawful.
Now the government has added a demand-side lever: $30 per citizen who signs up for its Chivo wallet ahead of the Sept. 7 effective date. Skeptics quoted around the rollout frame the core question as whether Salvadorans will treat BTC as a medium of exchange or, like most holders elsewhere, as a store of value they never spend.
First-order effects
- Every Salvadoran who downloads Chivo receives $30 in bitcoin at launch — a direct state subsidy to seed adoption of the wallet through which legal-tender payments are supposed to flow.
- Strike's remittance and payment rails go live nationally despite the open licensing question, leaving early cross-border transfers operating in a regulatory gray zone.
Second-order effects
- If citizens hoard rather than spend their $30, as the store-of-value critique predicts, the government bears the cost of sustaining usage — a fiscal drag that compounds as other funding sources tighten.
- Other remittance-dependent economies watch the experiment closely: a working bitcoin corridor pressures traditional money-transfer operators' fee structures, while a botched one hands them an argument against crypto rails.
Third-order effects
- The arc runs from launch to reckoning: by late 2021 users reported bitcoin vanishing from Chivo wallets, by 2022 the country's funding sources were drying up, and by 2023 88% of citizens hadn't used BTC even as the IMF pressed for repeal — making this the defining stress test of whether a small state can impose a volatile asset as legal tender against creditors' objections.
- If the pattern holds, national bitcoin adoption becomes less a monetary policy than a sovereignty play — leaders doubling down on crypto identity even when domestic uptake fails and multilateral lenders push back.
The trend: Nation-state bitcoin adoption is being tested in real time in El Salvador, where forced legal tender meets weak organic demand and IMF resistance, setting the template other governments will either copy or cite as cautionary.