El Salvador celebrates one year with bitcoin, did it work?

First modification: 09/07/2022 – 05:06

An economic experiment. When El Salvador announced that it would be the first country in the world to adopt bitcoin as legal tender, the crypto asset was at its peak and no one had global inflation, the war in Ukraine and other evils on their radar that a year later continue to to the most famous cryptocurrency in one of its worst streaks.

A year later, experts point out that the bet of the millennial president, Nayib Bukele, has not been successful. In the Central American country, the adoption of Bitcoin has been slow and the fall in price has eliminated the enthusiasm of September of last year.

Bitcoin has not even come close to replacing El Salvador’s other strong currency, the US dollar, although it has also not led the country into financial bankruptcy as some predicted.

Bukele did not present any official plan or public policy, he was framed in the massive adoption of bitcoin, obtaining profits with the purchase of the cryptocurrency with state funds, attracting investment and saving millions of commissions for remittances.

As usual, from his Twitter account he has promoted the use of bitcoin and has defended his commitment to the cryptoactive, but now he has not referred to the subject for more than two months. The presidential silence on bitcoin began on June 30, when he announced the purchase of 80 coins with state resources and that it was part of a sharp drop in its value.

During this year El Salvador allegedly bought 2,381 bitcoins for more than 100 million dollars, launched a digital wallet to deliver a bonus to its users, announced the construction of “bitcoin City” and the placement of 1,000 million in crypto-backed bonds, but almost all of this information is secret beyond Bukele’s tweets.

“Everything that has been linked around the implementation of the Bitcoin Law has been full of opacity, there are many unknowns that, a year after the law came into force, we still do not know it as civil society,” said economist José Luis Magaña .

According to the expert, the adoption of the crypto asset has not boosted the salvadoran economy, given that the Central Reserve Bank expects 2022 to close with economic growth of 2.3%, a rate that is in the range recorded “for decades and before the pandemic.”

A reality commented by economic actors. Wilfredo Mendoza, manager of a cafeteria, stated that payment with bitcoin in the establishment “is totally minimal” and that “people who consume (and pay) through the application are rare,” referring to the government wallet.

“Some foreigners do come to pay in bitcoin, but in national clients it is less (the payment). Of the total, of 100% of the clients, 0.05% is (payment) in bitcoin,” he commented.

Last July, the Bureau of Economic Research published an investigation stating that only 20% of the population uses the government wallet, called Chivo Wallet, after collecting the bonus.

with EFE