When El Salvador made Bitcoin legal tender in September 2021, it didn’t just make headlines-it triggered a global reckoning. For the first time ever, a country treated a decentralized cryptocurrency like the US dollar: as money you must accept. No choice. No opt-out. That single move forced the world to ask: Is this the future of money, or a dangerous experiment gone wrong?

What the Law Actually Did

El Salvador’s Bitcoin Law didn’t just allow Bitcoin payments. It made them mandatory. Under Article 7, every business, from a street vendor to a hospital, had to accept Bitcoin as payment for goods and services. If someone offered Bitcoin, you had to take it. And if you didn’t? You could be fined. The law also let people pay taxes in Bitcoin, settle old dollar debts with Bitcoin, and use it for any transaction without limits. The government backed it with a $150 million Bitcoin trust fund and launched the Chivo Wallet app, giving every citizen $30 in free Bitcoin just to download it.

But here’s the twist: even though Bitcoin was now legal tender, the US dollar didn’t disappear. It stayed. El Salvador still uses the dollar for accounting, pricing, and most daily transactions. Bitcoin was meant to run alongside it-like a second currency you could choose to use. But the law didn’t give you the choice. You had to accept Bitcoin, even if you didn’t want it.

Why the IMF and Global Banks Were Alarmed

The International Monetary Fund didn’t hold back. Within weeks, they called the move a “major risk” to financial stability. Their main worry? Volatility. Bitcoin’s price can swing 20% in a day. Imagine a farmer selling coffee for 1 Bitcoin. If that Bitcoin drops 30% overnight, his income vanishes. No central bank can step in to stabilize it. No one can print more Bitcoin if the economy slows down.

The IMF also pointed to legal chaos. Most countries have laws that let businesses refuse cash-like a coffee shop that only takes cards. But El Salvador flipped that. Now, refusing Bitcoin could mean a lawsuit. Legal experts around the world, including Dror Goldberg, said this violates basic property rights. You shouldn’t be forced to take something you don’t trust, especially if its value can evaporate before you even cash it out.

And then there’s money laundering. Bitcoin’s pseudonymous nature makes tracking transactions hard. Financial regulators in the US, EU, and UK worried El Salvador was opening the door to criminals. The FATF (Financial Action Task Force) warned that without strict KYC rules, Bitcoin could become a tool for tax evasion and illicit finance.

The Crypto Community’s Cheerleading

Meanwhile, Bitcoiners celebrated. They called it the first real test of Bitcoin as money-not just speculation, not just tech, but actual currency in daily life. For years, crypto advocates argued Bitcoin could bypass broken banking systems. El Salvador, with 70% of its population unbanked, seemed like the perfect case study. If it worked here, it could work anywhere.

Industry leaders like Michael Saylor and Cathie Wood praised the move as bold. They said it proved Bitcoin could function as legal tender without government control. For them, this wasn’t just about El Salvador-it was about the future of money itself. If a small nation could do it, why not others?

But the cheerleading ignored a key fact: adoption wasn’t growing. It was collapsing.

The Reality on the Ground

The numbers tell a different story. Half of Salvadorans downloaded the Chivo Wallet at launch. But by early 2022, more than 60% of them hadn’t made a single transaction. One in five never even spent their free $30. And here’s the kicker: 88% of businesses that received Bitcoin immediately converted it to dollars. They didn’t want to hold it. They didn’t trust it. They just wanted to get rid of it.

Only about 5% of all sales in El Salvador were paid in Bitcoin. And most of those were from people who were already tech-savvy, banked, young, and male. Not the unbanked. Not the rural poor. The people the law was supposed to help stayed out of it.

Even the government’s own data showed the system was barely used. The average active user withdrew cash from a Chivo ATM less than 2.6 times a month. That’s not financial inclusion. That’s a handful of people playing with free crypto.

Why Other Countries Didn’t Follow

Other nations watched closely. Nigeria, Jamaica, and the Bahamas all launched their own digital currencies-but they were central bank digital currencies (CBDCs). Controlled. Stable. Backed by the state. Not Bitcoin.

Why? Because CBDCs let governments keep control. They can track transactions, freeze accounts, set interest rates, and prevent crashes. Bitcoin does none of that. El Salvador gave up monetary sovereignty. It can’t print money. It can’t adjust interest rates. It’s now at the mercy of a global, decentralized network it can’t regulate.

Countries with inflation problems-like Argentina and Lebanon-still didn’t copy El Salvador. Why? Because Bitcoin doesn’t fix inflation. It just replaces one volatile asset with another. If your currency is collapsing, you don’t want to hold Bitcoin. You want dollars. Or gold. Or something stable.

The Bigger Picture: A Warning, Not a Blueprint

El Salvador’s Bitcoin experiment didn’t fail because Bitcoin is bad. It failed because forcing people to use it ignores human behavior. Money isn’t just code. It’s trust. It’s predictability. It’s the belief that what you’re holding today will still be worth something tomorrow.

The world didn’t reject El Salvador because it was anti-crypto. It rejected it because the law was unrealistic. You can’t mandate trust. You can’t legislate adoption. People don’t use Bitcoin because a law says so. They use it because it’s easier, cheaper, or safer.

And right now, for most people, it’s none of those things.

What’s Next?

El Salvador still holds Bitcoin. It still accepts it. But it’s no longer a headline. The world moved on. The real story isn’t whether Bitcoin will replace the dollar. It’s whether any country will ever try to force it again.

The answer? Almost certainly not. Other nations are watching El Salvador’s slow fade-not as inspiration, but as a cautionary tale. The path to cryptocurrency adoption isn’t through laws. It’s through utility. Through simplicity. Through real people choosing Bitcoin because it helps them-not because they have to.

For now, the only thing El Salvador achieved was proving that money isn’t something you can mandate. It’s something you earn.