El Salvador’s bitcoin holdings down 60% to $60 million, one year

It has been more than a year since El Salvador made history by becoming the first country to make bitcoin legal tender, and so far, 37-year-old resident Edgardo Acevedo has found the nationwide crypto experiment to be relatively anticlimactic.

“I don’t think anything has changed, except that the country is more recognized than before, but the economic life of Salvadorans remains the same or worse than a few years ago,” said Acevedo, a development engineer working in the capital city of San Salvador.

Acevedo, who is also known by the pseudonym Ishi Kawa, tells CNBC that while bitcoin has become a topic of conversation, adoption remains low, and he has personally found that there are very few businesses that accept the world’s biggest cryptocurrency — and even fewer Salvadorans who wish to pay in the digital token.

“What has improved is the issue of violence and crime, but economically, I can say that nothing has changed,” he said.

It has been a rocky time, with the project not living up to the grand promises made by the country’s popular and outspoken president Nayib Bukele.

The use of bitcoin in El Salvador appears to be low, as the currency has lost about 60% of its value since the experiment started and the country still faces plummeting economic growth and a high deficit. El Salvador’s debt-to-GDP ratio — a key metric used to compare what a country owes with what it generates — is set to hit nearly 87% this year, stoking fears that the nation isn’t equipped to settle its loan obligations.

Data from Bloomberg Economics shows that El Salvador tops its ranking of emerging market countries that are vulnerable to a debt default. Even as it retires some of its outstanding debts, the country’s domestic and multilateral loan obligations pose a real threat, in part because the world’s biggest lenders aren’t too keen to give cash to a country betting its future on one of the most volatile assets on the planet.

Pair these economic woes with a renewed war on gang violence and the country is barreling toward uncertainty.

“The government claims the developments as a success, but most local commentators and international watchers are underwhelmed,” Rachel Ziemba, founder of Ziemba Insights, told CNBC.