REGULATIONBITCOIN

Data shows El Salvador｜Although Bitcoin has become legal tender, internet access is only widespread in urban areas

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Data shows El Salvador｜Although Bitcoin has become legal tender, internet access is only widespread in urban areas

The Central American country of El Salvador has announced that it will adopt Bitcoin as legal tender (moneda de circulación). If the country is to implement Bitcoin as a means of payment, the "internet penetration rate" may become a primary obstacle. What are some other interesting data points about El Salvador?

Where is El Salvador?

The Republic of El Salvador is located in Central America, neighboring Guatemala and Honduras. It was colonized by the Spanish in the 16th century. The name "Salvador" means savior, derived from the colonizers' naming. Since gaining independence in 1821, the country currently has a population of 6.51 million people, covering an area of 21,041 square kilometers, with a population density of 313 people per square kilometer and a GDP per capita of approximately $3,500.

For comparison, Taiwan has a population six times larger than El Salvador, an area 1.7 times bigger, a population density twice that of El Salvador, and a GDP per capita of around $32,000.

"McDonald's Cannot Refuse Bitcoin Payments." Stores Only in Urban Areas

The 39-year-old president, Nayib Bukele, mentioned in a phone conference that "if you go to a place like McDonald's, they cannot refuse to take your Bitcoin, they have to accept it as a legal tender."

However, when it comes to fast-food chains, currently only urban areas can enjoy this payment method. Whether it's McDonald's or the popular Papa John's in Central and South America, their presence is concentrated in the capital, San Salvador. Other regions have almost none.

Distribution of McDonald's in El Salvador

Low Internet Penetration in El Salvador

Implementing Bitcoin payment applications in El Salvador must consider the crucial factor of internet connectivity. Research shows that the largest telecommunications service provider in El Salvador, Tigo Movil, only offers 4G networks in the central capital and main roads, with sporadic 3G coverage outside the capital. Therefore, without offline payment solutions for Bitcoin, it may be challenging to reach all Salvadorans.

Signal distribution of El Salvador's largest telecom provider, Tigo Movil

As of 2020 statistics, El Salvador still awaits inclusive financial services. Only 29% of the population has a bank account, 5.7% own a credit card, 3.5% have a mobile financial account, and only 5.6% shop online or pay bills.

Of course, more obstacles mean more room for improvement and completion. Whether Bitcoin can become part of the general public's life depends on strengthening infrastructure and changing usage habits. This market still holds considerable potential for development.

Payment Processor Strike: Lightning Network Reducing On-Chain Fees

Moreover, El Salvador's GDP per capita is not high, yet Bitcoin transaction costs are not necessarily cheap. Whether it is cost-effective for daily payments remains to be seen.

Currently, the official statement from the payment processor Strike, which El Salvador partners with, is that the platform does not charge additional fees but there are still on-chain transaction costs. Opting for Lightning Network payments can minimize the usage costs.

Furthermore, when Strike CEO Jack Mallers was interviewed, he was asked whether adopting Bitcoin would make it easier for Salvadoran officials to hide corrupt funds. Mallers emphasized that Bitcoin is an open financial network accessible to all. His focus is on establishing inclusive finance in the country, and the government will introduce Bitcoin-supporting wallets in the future.