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Are Cryptocurrencies Currencies? Bitcoin as Legal Tender in El Salvador / Fernando E. Alvarez, David Argente, Diana Van Patten.
- Format:
- Book
- Author/Creator:
- Alvarez, Fernando E.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w29968.
- NBER working paper series no. w29968
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2022.
- Summary:
- A currency's essential feature is to be a medium of exchange. We leverage a quasi-natural experiment--El Salvador as the first country to make bitcoin legal tender--to study a cryptocurrency's potential to be used in daily transactions. The government also launched and provided incentives to download and use a digital wallet named Chivo, which shares features with Central Bank Digital Currencies (CBDCs) and allows users to trade bitcoin and dollars. Were Chivo Wallet and bitcoin actually adopted after this "big push"? Conducting a representative face-to-face survey and relying on blockchain data to obtain all Chivo transactions, we document how usage of digital payments and bitcoin is low, concentrated, and has been decreasing over time. We find that privacy concerns are key barriers to adoption, which speaks to a policy debate on crypto and CBDCs that has had anonymity at its core. We also estimate the technology's adoption cost and its network externalities.
- Notes:
- Print version record
- April 2022.
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