One Year In, El Salvador’s Bitcoin Gamble Keeps Making Waves
Many flock to crypto to try and escape the ever-present influence of central banks and governments. However, Bitcoin’s impact remains just too big to ignore by some leaders who occupy the halls of power in their nations.
El Salvador is one example led by the young, tech-focused Nayib Bukele. The Bitcoin advocate and frequent Tweeter made history in early September 2021 when Bitcoin was made legal tender in the small Central American nation.
Digital currency advocates, including Bukele, argued the move would boost the prospects of millions of El Salvadorans who lacked access to “traditional financial services” and bring much-needed attention and investment to the country.
“El Salvador has the right to advance toward the first world,” Bukele explained in an official statement as the crypto decree came into effect.
Unsurprisingly El Salvador’s move to Bitcoin attracted plenty of headlines. Many have decried Bitcoin’s status as legal tender in the country – calling it hype and a detriment to the local economy. In addition, complaints have surfaced about lagging Bitcoin usage and a culture that emphasizes ‘tech tourists’ over locals regarding crypto.
El Salvador Remains Steadfast In Pushing Bitcoin Adoption Forward
However, one year later, Bitcoin still has a place in El Salvador’s society, even amid massive price slumps for 2022. Interest in crypto remains, and the country has had several positive aspects amid its continued shift towards Bitcoin.
Journalist Alex Kantrowitz wrote about his visit to El Salvador’s El Zonte in February 2022, known as the epicenter of the nation’s crypto movement. He noted how Bitcoin access helped locals transfer money without paying high remittance fees and quoted local Roman Martinez, who explained;
“The Salvadorian people don’t have bank accounts — now they do…people are buying an asset for the first time.”
In late July 2022, Finance Minister Alejandro Zelaya argued that adopting Bitcoin as a legal tender did much of the same Kantrowitz wrote about – bringing financial access to the unbanked and bolstering tourism, even if usage as a means of exchange was low.
At the time, El Salvador had purchased 2,381 Bitcoins with public funds. A month earlier, President Bukele announced an 80 Bitcoin purchase that totaled an investment of $1.52 million in the cryptocurrency.
The massive price slides in Bitcoin over the last several months have led to immense criticism toward El Salvador. In January, the IMF urged the nation to give up Bitcoin as legal tender and cautioned that its status in the nation might make it hard for the international entity to give out loans.
Nevertheless, in June, Zelaya noted that Bitcoin’s price slides resulted in an “extremely minimal” fiscal risk to the nation. Citing an estimate from Deutsche Welles that the nation’s Bitcoin portfolio had lost $40 million, Zelaya indicated the figure “does not even represent 0.5% of our national general budget.”
Can Education Transform Bitcoin’s Prospects In Nations Across The World?
Some argue that the most significant barrier to Bitcoin adoption is education. For example, a hotel owner in the country told ABC News;
“a lot of people get frustrated with the bitcoin apps, but I don’t think it’s because they are bad, it’s because they don’t know how to use them.”
Fortunately, crypto education keeps picking up steam in El Salvador and Central and South America. August 2022, reporting from CoinTelegraph covered the grassroots ‘Mi Primer Bitcoin’ program that saw its first students start studies in May.
Launched with the support of the Ministry of Education, the NGO offers free Bitcoin education to citizens.
Earlier in 2022, Paxful announced the launch of an educational and training center in El Salvador to foster free crypto learning opportunities. According to reports, the “La Casa Del Bitcoin” initially focuses on educating people about the benefits of buying and selling Bitcoin as a medium of exchange.
As the first anniversary of El Salvador’s adoption of Bitcoin has now come and gone, the country remains resolute in being a global leader in crypto adoption.
Despite intense criticism and turbulent markets, El Salvador continues to push forward with a range of Bitcoin-focused innovations designed to boost economic prospects and tourism.