An Entire Country Switched Over to Bitcoin and It's Turned Into a Disaster

As the United States struggles to get even basic crypto legislation off the starting line, one small nation went all in on blockchain — and it's going about as well as you'd expect.

That country is El Salvador, home to the native Pipil people of Cuscatlán, ancient mangrove forests, and for four wild years, the crypto industry.

Following the whims of conservative populist Nayib Bukele — who calls himself "the world's coolest dictator" — El Salvador's congress signed legislation to become the first country in the world to recognize Bitcoin as legal tender in June of 2021. The government hoped the edict would jump-start the nation's ailing economy, a growing haven for organized crime that's typical of high-poverty nations.

Dreaming of the crypto future, lawmakers set the date for national tokenization for September 2021, but there was a lot of work to do.

Leading up to the big day, the Central American nation contracted US crypto asset trust BitGo to lead its central crypto wallet, promising $30 USD worth of Bitcoin to each citizen, backed by a $20 million government Bitcoin purchase. Plans were hastily cobbled together for BitGo to become the official digital banking infrastructure for El Salvador's 6.3 million residents. Bukele took to Twitter to hype up the moves as Bitcoin ATMs sprouted up on every street corner.

In all, about $200 million in El Salvadorian tax dollars were earmarked for the gamble — 2.7 percent of the government's total annual budget, according to Time. The government's hype wasn't just typical crypto bro babble; so much was riding on it that it had to work.

Then, reality hit. The immediate results were devastating. Bitcoin's price almost instantly crashed by about 20 percent. BitGo's servers struggled to keep up with the flood of new users, even as the government's official crypto app failed to show up on platforms like Apple and Huawei. Protestors took to the streets, surrounding the Supreme Court, where they were met by heavily armed riot police.

Since then, the country has experienced increased inflation, upsized national debt, and a huge increase in poverty. As of early March, 2025, less than 2 percent of the nation's citizens have adopted the much-hyped financial tech.

With little market incentive to seek a legitimate living, El Salvador's crime woes persisted, prompting a brutal crackdown by Bukele which saw the county's prison population balloon by 205 percent from 2021 to 2024. For many El Salvadorians, the rise of crypto and the escalation of state violence went hand in hand.

And despite requiring all El Salvadorian businesses to accept Bitcoin as tender, Bukele's crypto gamble has largely failed to court many of the international players he hoped would pump his country full of virtual cash.

One video from 2022 might help explain why. It shows a crypto enthusiast at a self-serve beer kiosk struggling to pay for his pint with Bitcoin. "I don't have my invoice ready," he says as he waves his phone around the kiosk to no avail.

It's no wonder El Salvadorans have largely rejected the crypto regime, if this is supposed to be their salvation from a life of poverty.

But his nation's lack of enthusiasm hasn't stopped Bukele from doubling down on his experiment. The president recently expedited plans for an ostentatious "Bitcoin City" which is meant to court industry moguls and crypto enthusiasts from around the world. Located on top of an old mangrove forest, construction has so far destroyed over three square kilometers of wildland and displaced 225 households, many of them indigenous.

He's likewise reneged on a $3.5 billion IMF loan that would have restricted the government's Bitcoin transactions and banned government Bitcoin accumulation. That was last week, and yesterday El Salvador's "Bitcoin Office" announced it had added one more Bitcoin to the reserve, a bizarre move making the deal's future uncertain.

It's a surprise twist in the long and winding saga of El Salvador's Bitcoin experiment, one that's apparently far from over.

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