El Salvador: The First Country with Bitcoin as Legal Tender

Short answer: On Sep 7, 2021, El Salvador became the first country in the world to make bitcoin legal tender. In everyday life, though, bitcoin barely caught on there, and to get a loan from the International Monetary Fund (IMF) the country changed the law in early 2025: since then nobody has to accept bitcoin. What remains is the state reserve. It grows by about one bitcoin a day and stood at 7’831 BTC on Nov 10, 2026.

El Salvador is the country most people think of when states and bitcoin come up. Which other countries hold bitcoin and where their coins come from is covered in the overview Countries with Bitcoin Reserves. This article is only about El Salvador: what the country promised, what came true and what you can take from it as a long-term holder.

Why El Salvador of all places?

El Salvador is a small country in Central America with a little over 6 million people. It has had no currency of its own since 2001, when the US dollar replaced the colón. So the country cannot run monetary policy or print money. Interest rates and inflation are set by the US Federal Reserve.

Two things made bitcoin attractive to the government:

• Remittances: a large part of the economy comes from Salvadorans working in the US and sending money home. Traditional transfer services charge noticeable fees for this. Bitcoin over the Lightning Network was meant to make it almost free.
• Many people without a bank account: a large share of adults had no account. A wallet on a phone needs no bank.

The model was already in the country. In the surf village of El Zonte, the "Bitcoin Beach" project had been running since 2019: an anonymous donor had given bitcoin, and shops, fishermen and families paid each other over Lightning. President Nayib Bukele wanted to extend this to the whole country.

The 2021 Bitcoin Law

On Jun 5, 2021, Bukele announced in a video message to a bitcoin conference in Miami that he would make bitcoin legal tender. Four days later, on Jun 9, 2021, parliament passed the law with 62 of 84 votes. It came into force on Sep 7, 2021.

The core of the law:

1. Bitcoin is legal tender alongside the dollar. The exchange rate is set freely by the market.
2. Obligation to accept: every merchant must accept bitcoin when a customer wants to pay with it. The only exception was for those without access to the necessary technology.
3. Taxes can be paid in bitcoin.
4. The state guarantees conversion: a state fund (FIDEBITCOIN) of $150 million was to ensure that anyone could exchange bitcoin for dollars instantly. So whoever accepted bitcoin did not have to carry the price risk.

On the day the law came into force, one bitcoin cost $46’858, around €39’800. For comparison: on Nov 13, 2026 it costs €63’252.

Chivo: the state wallet

For the launch, the government released the Chivo app. Every citizen who registered with their ID received a starting balance of $30 in bitcoin. The app could hold dollars and bitcoin, send payments over Lightning and convert without fees. There were also Chivo ATMs across the country and in some US cities.

The start was bumpy. In the first days the servers went down, sign-ups stalled, and there were reports of identity fraud: strangers had registered with stolen ID numbers and collected the bonus.

More important than the technology is a point many overlook: Chivo was a custodial wallet. The bitcoin sat with the operator, not with the user. Anyone using Chivo was trusting a central party again, in this case the state. That had little to do with the basic idea of bitcoin: your own keys and no middlemen.

One bitcoin a day: the state reserve

From September 2021 the government bought bitcoin, often in small tranches when the price fell. On Nov 17, 2022, Bukele announced that from the next day on it would buy one bitcoin every day. The price was $16’692 then, around €16’400, close to the low of that bear market.

The plan has been running ever since. The National Bitcoin Office (ONBTC) shows the reserve's addresses on its dashboard bitcoin.gob.sv. Anyone can check the holdings on the blockchain. That is more transparency than almost any other state offers for its bitcoin.

Besides the daily plan there were individual larger purchases. On Nov 17, 2025, when the price had fallen from its high, El Salvador reported buying 1’090 BTC. That is why the holdings jump clearly at the end of 2025:

Source: dashboard of the National Bitcoin Office, recorded in the bitcoin-powerlaw.com treasury overview.

One bitcoin a day is nothing other than a savings plan: a fixed rhythm, regardless of the price. You can do the same on a small scale. How many bitcoin you accumulate with a fixed amount over the years is worked out by the savings plan calculator:

Volcano bonds and Bitcoin City

In November 2021 Bukele presented an even bigger plan: volcano bonds worth $1 billion with a 10-year term. Half was to go into bitcoin, the other half into energy and bitcoin mining with geothermal power from the Conchagua volcano. A new "Bitcoin City" without income tax was to be built there.

In January 2023 parliament created the legal framework with a law on digital securities. The volcano bonds, however, were not issued (as of November 2026). Bitcoin City remained a model and a plan.

The geothermal mining, on the other hand, is real: since 2021 the state energy company LaGeo has mined bitcoin at the Tecapa volcano with geothermal power. The amounts are small compared to the purchases. Another country that ran state mining on a much larger scale is Bhutan with its hydropower.

The IMF loan and the 2025 law change

El Salvador was heavily indebted and needed cheap money. The IMF had criticised bitcoin as legal tender from the start: because of the price swings, the risks to the state budget and consumer protection.

On Dec 18, 2024, the IMF and the government agreed on a programme. Parliament implemented the conditions on bitcoin on Jan 29, 2025:

• Merchants no longer have to accept bitcoin. Those who want to may continue to.
• Taxes and fees are paid in dollars only.
• The state withdraws from Chivo. The wallet was to be wound down.

On Feb 26, 2025, the IMF's Executive Board approved the loan: an Extended Fund Facility over 40 months and around $1.4 billion. A means of payment that nobody has to accept is no longer legal tender in the usual sense. So El Salvador was the country with bitcoin as legal tender for a little over three years. Bitcoin is still allowed there, and those who want to accept it do.

And the purchases? In the programme the government committed that the public sector would not accumulate further bitcoin. The dashboard nevertheless keeps showing one bitcoin a day. The IMF stated in its review reports that the additions came from consolidating bitcoin that already sat in other government wallets. The government keeps speaking of purchases. From the outside it is impossible to say for sure which account is right. The only certainty: the publicly visible holdings keep growing.

Promise and reality

Measured against its own goals, the record is mixed.

A survey of around 1’800 households by economists around Fernando Alvarez (published in 2022 by the National Bureau of Economic Research, NBER) found: most people knew Chivo, many had downloaded the app for the bonus, but few kept using it afterwards. Only a minority of firms accepted bitcoin, and only a small part of their sales went through it. As reasons, many said they preferred cash or did not trust bitcoin.

That is less surprising than it sounds. If you are paid in dollars and pay your rent in dollars, you have little reason to pay the baker with a volatile asset. And if you think bitcoin will rise, you are even less likely to spend it.

What you can learn from it

1. Money cannot be decreed. Good money wins because people want to hold it voluntarily, not because a law requires it. Which properties count for that is explained in What Is Good Money?. Bitcoin scores on scarcity and independence. For daily life it lacks, as long as it swings strongly, a stable unit of account.

2. Bitcoin is saved first and spent later. In El Salvador, bitcoin found followers where people wanted to hold it, not where they were supposed to pay with it. For you as a saver in Germany, Austria or Switzerland, that is the familiar order: accumulate first, spend much later.

3. Custodial wallets are not your bitcoin. Chivo showed how quickly a state app becomes a bank by another name. If you hold bitcoin to be independent, the keys belong with you.

4. Discipline beats timing. El Salvador's daily plan started in November 2022 close to a low, but that was luck. The plan works because it keeps running stubbornly, even in phases when headlines and price argue against it.

5. A single state barely moves the market. 7’831 BTC is less than 0.04% of the 21 million. Whether states will one day hold bitcoin as a reserve on a large scale is examined in Bitcoin as a Reserve Currency. Don't build your own plan on it.

Rule of thumb: El Salvador has shown that bitcoin can work as a state reserve, but not as everyday money imposed by decree. Saving happens voluntarily.