A year on, El Salvador's bitcoin trial is stumbling

STORY: This sleepy area in the shadow of El Salvador’s Conchagua volcano was set to become a bustling cryptocurrency hub.

But nearly a year after big promises about “Bitcoin City”... Reuters found no heavy machinery, construction workers or raw material to indicate any progress.

''...People here have started working from scratch and started small businesses on the beach, that's all the tourism we have...''

President Nayib Bukele had promised “Bitcoin City” would be a tax haven for crypto enthusiasts.

Instead, for many, it’s become a symbol of folly in one of the poorest countries in Latin America.

When El Salvador adopted Bitcoin as legal tender last September, the cryptocurrency was close to $47,000.

It's recently been worth less than half of that, trading at just under $20,000.

The price drop has also elevated El Salvador’s financial risk, complicating its search for $1.6 billion in sovereign bonds.

Use of the digital currency has had trouble catching on... along with the government’s bitcoin wallet, Chivo.

Neither the presidency nor the finance ministry would share figures on the wallet’s use... but a survey by the National Bureau of Economic Research, a U.S.-based NGO, found only 20% of people who downloaded the app kept using it after spending a free $30 credit from the government.

Almost no one has downloaded it this year.

The survey from the NGO found people don’t understand bitcoin, and they don’t trust it.

''For example, I have friends who have invested in that (bitcoin) and unfortunately, they have lost.''

The government says its bitcoin policy has attracted investment, reduced bank commissions to zero, increased tourism and promoted financial inclusion.

The International Monetary Fund says El Salvador should ditch bitcoin as legal tender.

Oscar Picardo, a technology institute director at a private university, says the stakes may have been too high for the country’s crypto gamble.

''This cryptoactive has been a very risky experiment, too risky for a poor country."

The government declined to comment on this story... but has defended doubling down on bitcoin in the past.