Since the introduction of the Bitcoin legal tender law in 2021, the subject of El Salvador has been one that has generated a great deal of strong opinions in this area. People who completely support President Nayib Bukele and dismiss any criticism as fear, uncertainty, and doubt (FUD) and disinformation that was created only for the purpose of attacking Bitcoin and the usage of it are on one side of the coin. On the other side, there are those individuals who mindlessly condemn him as a tyrant and an abuser of human rights, and they dismiss as meaningless anything great that he is achieving for his nation in light of the fact that he disregards the law.
Evidently, I do not hail from El Salvador. I have never lived in the country, and the short amount of time I have now spent there is by no means enough to truly acquire a deep insight into what life is like in El Salvador, or to really appreciate the nature of the challenges people face there. Neither of these things are possible for me because I have never lived in the country. Nevertheless, despite the limited amount of time I spent doing so, seeing things for myself has provided me with a totally different perspective than the one I had previously created only from the act of reading things on the internet.
Although adoption has been rather slow, the groundwork has been laid.
When the Bitcoin law was initially introduced, I viewed it with a great deal of skepticism. My first piece for Bitcoin Magazine was really about my concerns over the manner in which the law may have adverse effects and, in fact, collapse on itself if the adoption of Bitcoin took off too quickly in the beginning. I viewed the promise of conversion to USD by the government of El Salvador as something that could fail catastrophically if Bitcoin became a major vehicle for remittance payments, effectively bankrupting the trust established for conversion on the dollar side. This would be the case if Bitcoin became a major vehicle for remittance payments. To our great relief, it did not take place.
The wave of adoption in the nation appears to be flowing at a very glacial pace, and several of the people I spoke to when I was there informed me that many companies that formerly accepted bitcoin had actually stopped taking it over the course of the previous year or so. Chivo is still experiencing challenges, to the extent where even now there are still issues with the ATMs during tries to sell, and bad user experience flows make payment at the few establishments that take Bitcoin an irritating experience to go through. People frequently refer to it as a "Bitcoin nation," but this does not indicate that Bitcoin may be used anywhere in the country. It is in no way a "Bitcoin country." However, the number of situations in which you might put it to use in El Salvador is far more than in any other physical location I have ever been on my own. Even if the plant has not yet begun to sprout, it is obvious that the seed has been planted.
Bukele Is Expanding Past Bitcoin in Its Scope
But beyond the discussions about the use and acceptance of Bitcoin, Bukele has accomplished a great deal over the course of the past year. When individuals in this arena pontificate on the internet about the acceptance of Bitcoin in El Salvador, I get the impression that they lose sight of this fact, but what is being done in the country goes beyond only Bitcoin. Bitcoin is, without a doubt, a component of the strategy; but, President Bukele is accountable to a population that exceeds six million individuals in this country. It is not his primary worry, nor should it be, that Bitcoin would profit from his activities as president, and it should not be. He is responsible for the people of El Salvador and for ensuring that their well-being is maintained. This is the most important thing to him.
During my time in El Salvador for the Adopting Bitcoin conference, I had the opportunity to speak with a resident of the nation who has lived there for the past ten years but has just lately became interested in Bitcoin as a result of the Bitcoin Law that was approved by Bukele a year ago. The reality, as he described it, was much more brutal than any statistics could paint: street merchants being murdered because they were unable to afford 16 cents of protection money, widespread racketeering and robbery, and corruption all across the government. He had almost a decade of experience living in El Salvador as it was before Bukele. Because it was so simple to pay authorities, gang members could commit a murder, get detained, and then be free to continue their criminal activity within a few of months. It was normal for him to fall asleep to the sound of gunfire coming from the neighborhood across the street from his home, where rival gangs were squabbling over territory. It was anarchy in its purest form, unchecked by any authority.
Although I have spent my whole life in one of the most dangerous cities in the United States, I am unable to even begin to fathom what it would be like to live in such a setting. This year, everything changed when President Bukele declared martial law and launched an all-out fight on the gangs that were operating throughout the country. The effects of this year's crackdown on gang activity, which saw the arrest of up to 60,000 members of criminal organizations, are now clear.
People are going out at night whereas before the vast majority of people would not have considered it a risk that was worth taking, and there has been an increase in the number of tourists visiting the area. I am no used to living in situations where you need to keep your head on a swivel and pay attention to your surroundings, but not once in the whole week that I spent there did I get even the remotest inkling that there was even a remote possibility that something terrible could occur. To me, as an outsider, it seemed absolutely secure, and the man I met who had been living there for ten years characterized the El Salvador of today as a completely different nation in comparison to the one he moved to ten years ago.
Have there been any instances of arrests that turned out to be false? Yes. Is it possible to solve the problem of violence in the country without following the proper legal procedures or does this raise an existential dilemma? Yes. However, what suggestions does anyone else have for a different approach to taking care of the problem?
It was a common phenomenon for people to be murdered over amounts of money so tiny that, in the United States, many people would just tell a cashier to keep it because they don't want to carry that small amount of change in their pockets. This was because of the fact that it was a common occurrence for people to be murdered over sums of money that were so small. It's true that having a fair and impartial legal system is essential to maintaining social order, but wouldn't it be much more significant if people could go about their lives without fear of being killed for a few dollars? It seems to me that it is extremely simple for people who are not directly involved in a circumstance to provide advice to others on how they should deal with it, as if the circumstance were some kind of intellectual exercise that need to be tackled with the intention of finding an ideal answer. However, things don't operate like that in the actual world. The real world is a chaotic place, and finding a solution to every problem is nearly impossible.
A necessary precondition for genuinely permitting economic progress in the nation is the eradication of the large gang presence that exists there. It is impossible to have an expanding economy if criminal gangs are constantly pressuring individuals to give them money against their will. Because of the unstable political climate, no one from outside the country is likely to be interested in bringing their money and investing it in such a setting. No matter how flawed the solution that is being implemented right now may be, the fact remains that it is a solution, and it is producing results. The German company NOTUS Energy has announced that it plans to spend $100 million in the energy infrastructure of the nation. As one of the reasons for the decision, the company notably cited recent improvements in the safety of the country. It is extremely possible that interest in projects similar to those being considered now will continue to expand if Bukele and the present administration remain on the course they are on.
Not An Intellectual Exercise
El Salvador has not seen immediate wealth as a direct result of the Bitcoin Law, but it is building the groundwork for future economic growth. There are still problems with Chivo, but with enough time, those problems can be solved, and private solutions can be developed and adapted to satisfy the requirements of the people living in El Salvador. There hasn't been a widespread adoption of Bitcoin across the entire country just yet, but the groundwork has been laid for it. In a similar vein, the war on gangs that has been waged this year has not miraculously fixed the state of the economy or the nation as a whole, but it has sown the seeds of something. Because the gangs have been removed from the streets, there is now space for economic growth to occur in areas where it previously would not have had the opportunity to do so. The trajectory of events is heading in the correct way.
People on the outside looking in have attempted to portray Bukele and his endeavors as either terrible dictatorship or an already completed process of constructing a utopian ideal. Both of these interpretations are problematic. They both fall into the latter category in my view. He is the kind of person who is establishing the groundwork that will give people in El Salvador the space and leeway to generate their own economic prosperity.
Will it happen overnight? No. Is there an assurance that there will be a successful outcome? No. However, he is doing all in his power to clean up the wreckage that was caused by thirty years of criminal activity and bloodshed that followed a bloody civil war. Bitcoin users need to take a step back and recognize that this is a real country inhabited by actual people, not some intellectual exercise that can be debated over on the internet.
I get the impression that things are heading in a good way, and I certainly hope that this trend will continue.
This is a post that GoodluckTR has written as a guest. Opinions expressed are exclusively those of the author(s), and do not necessarily represent those of Bitcoin Magazine or BTC Inc.