This paper studies the potential of a cryptocurrency to become a medium of ex-
change. We use evidence from a natural experiment: In September 2021, El Salvador
became the first country in the world to make bitcoin legal tender, and all economic
agents were required to accept bitcoin for all payments. The Salvadorean govern-
ment also launched an app, “Chivo Wallet,” which allowed users to digitally trade
both bitcoin and dollars, and gave major incentives to download it. We conduct a
representative national face-to-face survey to obtain information on bitcoin’s usage
and effects. Leveraging this data, we document how, despite the government’s “big
push” and a large fraction of people downloading Chivo Wallet, usage of bitcoin
for everyday transactions is low and is concentrated among the banked, educated,
young, and male population. We also estimate the fixed cost of adopting the new
payment technology, the importance of strategic complementarities for users, and
the elasticity of substitution between mobile payments and other payment methods.