President Nayib Bukele announced the law via Twitter. The vote was 62 out of 84. It mandated that every Salvadoran business, from a street vendor to a multinational, must accept Bitcoin for payment if offered. The government simultaneously launched a digital wallet called Chivo, pre-loading it with $30 in Bitcoin for every citizen who registered. The rollout was chaotic. App stores were flooded. Protests erupted in the capital. The price of Bitcoin dropped 17% that day.
Bukele's stated aims were to reduce reliance on the US dollar, slash the cost of remittances from abroad, and attract foreign investment. Nearly a quarter of El Salvador's GDP comes from remittances, with traditional transfer fees claiming a significant portion. Bitcoin promised near-instant, low-cost transfers. The move was a deliberate snub to international financial institutions and a gamble on technological sovereignty.
The immediate aftermath was a study in friction. Many Salvadorans, particularly in rural areas with poor internet, distrusted the volatile digital currency. They quickly converted their Chivo Bitcoin into dollars at government kiosks. By the end of the year, the government's Bitcoin holdings had lost millions in value. The International Monetary Fund repeatedly warned against the risks.
El Salvador became a global case study. It demonstrated the immense practical difficulty of imposing a decentralized, speculative asset as a national currency. The experiment continues, with the government buying more Bitcoin as its value falls and building a Bitcoin-backed "volcano bond." It proved that legal tender status does not equate to widespread adoption or trust. The real impact was making a nation of 6.5 million people the test subjects for a radical monetary theory.