Bitcoin as a Legal Tender

This study examines the viability of Bitcoin as legal tender with particular emphasis on the experience of El Salvador. In particular, we examine the challenges, benefits, and costs, of using Bitcoin as legal tender in a country. Our analysis underscores the significant costs of using Bitcoin to process routine transactions. These costs, both temporal and financial, form a considerable barrier to Bitcoin’s widespread adoption and use as legal tender. Given the uncertain impacts that the successful adoption of Bitcoin may cause, we suggest that there is little reason for policymakers to actively drive Bitcoin adoption.