As governments in the region closely monitor El Salvador’s experience and a second country, the Central African Republic, follows suit with bitcoin adoption, Bukele’s struggles suggest that efforts to pass entire nations to cryptocurrencies are strewn with pitfalls.
“Nothing positive has happened,” said Ezequiel Milla, former mayor of La Union, speaking near the base of a volcano on the east coast of the country that Bukele plans to use for geothermal extraction of Bitcoin.
The spike in killings is just one of many issues interfering with the country’s bitcoin initiative, according to more than three dozen interviews – conducted in English and Spanish – with local officials, opposition leaders , entrepreneurs, bitcoin activists, and regular Salvadorans across the country.
Many Salvadorans remain wary of digital currency after a rollout marred by technical issues and identity theft. Despite the requirement to treat Bitcoin as legal tender, recent research indicates that most businesses do not accept it, and those that do report that customers rarely choose to pay with it.
In the east, where Bukele has pledged to build a futuristic bitcoin city to kick-start development, residents are still waiting for the more basic economic infrastructure the president promised years ago.
Meanwhile, plans to start offering a first-of-its-kind sovereign ‘volcano bond’ – which will be backed by geothermally mined Bitcoin – have been delayed, with some financial analysts viewing the proposed terms as a bad move. investment.
Even many of the most enthusiastic bitcoin supporters in El Salvador complain that the government’s flawed rollout has backfired by making Salvadorans bitter over a technology they might otherwise embrace.
Domestic critics, meanwhile, argue that Bitcoin adoption has achieved the opposite of economic empowerment by allowing Bukele to centralize power and undermine transparency.
“Bitcoin’s philosophy is about freedom, but in El Salvador the bitcoin experiment is part of an authoritarian project, and that’s inconsistent,” said opposition lawmaker and potential 2024 presidential candidate Claudia Ortiz. .
The experiment did not fail: the brass band attracted a constant flow of tourists and the attention of foreign investors. Some Salvadorans have embraced the initiative and supporters say that despite early setbacks, citizen interest is slowly growing. If Bitcoin’s price experiences one of the dramatic rallies the volatile asset has become known for, enthusiasm for the project could suddenly skyrocket.
But eight months later, the project has recorded more disappointments than victories.
It was during the Bitcoin 2021 conference, last June in Miami, that Bukele announced via video that El Salvador would become the first country in the world to make Bitcoin legal tender, citing its potential to reduce remittance costs and expand financial access for his country’s mostly unbanked population.
He framed the decision in lofty terms. “As humanity, we can do almost anything we imagine. Our ingenuity [is] what separates us from other species. In El Salvador, we are trying to salvage that idea and start designing a country for the future, using the best…ideas in history and around the world,” he said. “I believe Bitcoin could be one of those ideas.”
The news prompted a loud standing ovation from crypto devotees. At a time when Bukele was facing scrutiny for a power grab in which his party had removed several Supreme Court justices the previous month, it also changed the focus of international coverage of his presidency.
Four days later, the country’s legislature, where Bukele’s New Ideas party controls a super majority of votes, passed legislation adopting the new currency without much debate.
In September, the government launched the new currency, offering every citizen $30 worth of free Bitcoin if they downloaded the government’s digital wallet app, called Chivo, which means “cool.”