Nearly a year after Bhutan launched a nationwide cryptocurrency payment system for tourists, the model is revealing several obstacles. The QR codes once displayed in front of shops to accept crypto payments are now largely unused.
According to Rest of World, the number of cryptocurrency transactions at local stores is very low. Many small business owners say they have almost never seen customers scan QR codes to pay.
Last May, Bhutan became the first country to roll out a nationwide cryptocurrency payment network, allowing tourists to pay for visas, flights, hotels, restaurants, and many other services using over 100 cryptocurrencies through Binance's platform. In the first month of rollout, more than 1,000 merchants registered to participate.
However, after almost a year, the reality is that usage is very low. Many stores admit that the QR codes are still there but are rarely scanned.
According to analysts and locals, part of the impetus for this policy stems from Bhutan's significant Bitcoin holdings, acquired through mining. However, the implementation process appears to have overlooked obstacles such as localized power shortages, uneven technological infrastructure, and limited access to finance and technology for some segments of the population.
Therefore, expectations for the rapid adoption of cryptocurrency payments in this country are considered quite optimistic.
Bhutan began mining Bitcoin in 2019. Thanks to abundant hydroelectric power from its river system and mountainous terrain, while domestic electricity demand is low due to a population of less than one million, surplus electricity is utilized for cryptocurrency mining.
As of October 2024, Bhutan's Bitcoin reserves were estimated at around $1.4 billion, making it the world's largest holder of state-backed "green" Bitcoin. Some countries, such as the United States and China, hold larger amounts of Bitcoin, but most of this comes from acquisitions or asset seizures.
However, domestic infrastructure remains a bottleneck. Professor Jay Zagorsky of the Questrom School of Business (Boston University) notes that about one-third of Bhutan's population is illiterate. Meanwhile, using digital payment methods requires the ability to read, understand, and operate digital devices.
The power supply is also unreliable. On Medium, each Bhutanese citizen experiences about 19 power outages per year. According to World Bank data, approximately 20% of businesses in the country have to equip themselves with or share generators to maintain operations.
In Thimphu – the capital and largest city of Bhutan – the owner of a long-standing cafe, Ambient Cafe, said the shop doesn't specifically track transactions made through Binance. Occasionally, customers pay with cryptocurrency, but the frequency is quite low and doesn't make a significant difference to business.
