El Salvador Bitcoin one year later – Bitcoin Magazine
This is an opinion editorial by Jaime García, a Salvadoran-Canadian Bitcoiner and co-host of Global Bitcoin Fest.
Today marks El Salvador’s first anniversary since it adopted bitcoin as a legal tender currency. Depending on who you ask, El Salvador’s efforts have been a complete failure, a resounding success or various stages in between. There is no shortage of opinions, but there is only a proof of work that can show whether El Salvador has benefited from Bitcoin, and by that criterion the decision has been a clear success.
Arguably, the early Bitcoin rollout by the Salvadoran government with the Chivo government wallet was not ideal. Even today, adoption among the average Salvadoran is not high. But despite the fact that El Salvador’s critics have made valid criticisms, they cannot deny that the country has experienced incredible growth over the past twelve months.
El Salvador before Bitcoin
Let’s start by remembering where El Salvador was before the Bitcoin announcement. The truth is that many will not be able to remember because they could barely point to the country on a map. At best, many Bitcoiners would probably mistake El Salvador for Ecuador and make comments about how they would be able to spend their stake in the Galapagos.
Before El Salvador embraced Bitcoin, it endured centuries of colonial oppression, decades of military dictatorship, and a 12-year civil war, a proxy fight between the United States and the Soviet Union. When the Salvadoran government and leftist guerrillas signed the so-called peace agreement that ended the civil war in 1992, corrupt governments from both the right and the left of the political spectrum began to ransack the country. Unfortunately, they dedicated themselves to running corrupt personal enrichment schemes instead of rebuilding the country, perpetuating El Salvador’s debt and its infrastructure and societal deficits.
In the early 1990s, the Bill Clinton administration deported many undocumented Salvadorans from the United States, mainly from East Los Angeles, where many of their American-born children were engaged in street warfare. The exported phenomenon Marasor gangs, and the violence they brought to the country further depressed El Salvador’s dire economic situation.
Salvadorans grew tired of political corruption, gang violence and extortion, the lack of opportunities and the constant emigration to the United States. Mounting for a chance to fix the situation. It was the proverbial alignment of the stars that allowed the political conditions for El Salvador to adopt bitcoin as legal tender.
Ultimately, before the Bitcoin announcement, El Salvador was not in a good situation and had the deep scars of poverty, suffering and death as evidence.
The biggest country rebrand in history
Currently there is no shortage of politicians on Twitter signaling that they are pro-Bitcoin, or worse, that they are pro “crypto.” Targeting Bitcoiners as a constituency is the latest affinity scam from the high preference political campaign complex. But in El Salvador, adopting bitcoin was strictly about economic survival.
Bukele announced in 2017 that El Salvador would adopt bitcoin, even before he became president. At the time, the Salvadoran population did not know what the magnitude of this announcement would mean. The statement was not for court votes, but to warn the opponent that his government would do things outside the box.
Dagoberto Gutiérrez, a political analyst widely respected by Salvadorans, was recently asked to weigh in on El Salvador’s decision to adopt Bitcoin on a popular morning radio show. the host, Pencho Duque, asked Gutiérrez if he thought the project was a failure and pointed to low adoption by Salvadorans as evidence. The 77-year-old answered in a simple yet profound way that even seasoned Bitcoiners still can’t articulate. Gutiérrez summed up his thoughts by saying that at this point, adoption and our opinions about it are irrelevant to the more significant forces at play. In his estimation, the move was about game theory, the first-mover advantage of a better monetary system and safeguarding El Salvador’s over-reliance on the US dollar as the hegemony is in its final decline.
It has taken a full year for many skeptics to realize what Gutiérrez has: that the obvious choice for a country like El Salvador is to seek refuge in our age’s growing monetary system rather than a dying one. Yet, despite such disarming arguments, many, including hardcore Bitcoiners, still criticize El Salvador and personally blame Bukele for being disingenuous (“LARPing,” as some would call it) and waste money investing in bitcoin.
Julian Figueroa, a Canadian Bitcoiner and filmmaker, recently suggested that the funds and efforts invested in Bitcoin have yielded significant returns through tourism revenue. In a recent video, Figueroa suggests that the goal of the bitcoin investments may really be to improve the country’s brand. The returns are undeniable, even getting one positive assessment from the World Tourism Organization.
And to put the investment into perspective, Bukele has stated that his government invested more money in women’s rights than it did in bitcoin, although critics rarely point to it as “LARPing.”
OG Bitcoiner and El Zonte Capital investor Stacy Herbert has called El Salvador’s efforts to adopt Bitcoin legal tender, and the tourism boom it has generated, “the best rebrand in history.”
Bitcoin has been good for El Salvador
While the tourism card may be starting to look like it’s being overplayed, we only need to look at other economic indicators from a variety of sources to notice further concrete improvements for the country:
El Salvador achieved the above metrics during a bear market and in the second year of the COVID-19 pandemic, despite constant criticism from the traditional financial sector.
In addition, after many months of FUD by the mainstream media, claiming that El Salvador would default on its government bond obligations, Morgan Stanley is now advising investors to buy El Salvador bonds. Many believe El Salvador is positioned to meet its bond obligations for 2023 and 2025.
Bitcoiner’s experiences
It might be easy to dismiss empirical evidence that El Salvador’s use of Bitcoin is improving the lives of everyone there, but that evidence abounds. A year ago, for example, people would be hard-pressed to find a travel video on YouTube featuring El Salvador. Yet today, not only can you find many of these videos, but many Bitcoiners have taken to documenting their lives and their journeys in moving to El Salvador. You just have to look at the plebs on Twitter shares their photos and hang out with locals and Bitcoiners in El Zonte and San Salvador to know something special is happening.
Add to this the two Bitcoin conferences held there last November, with another planned this year, the 44 bankers who descended on Bitcoin Beach, weekly Bitcoin meetings taking place across the country and the founding of two successful educational nonprofits, My first Bitcoin and Torogoz Dev. El Salvador also hosted two international surfing competitions, and several of the Salvadoran diaspora have returned home. These improvements, both quantitative and qualitative, are not coincidences, but rather due to the transformative power of Bitcoin.
The security of the individual is freedom
Nevertheless, one of the most significant transformations in El Salvador is underway and not without some controversy. To put it simply, Salvadorans have never been truly free; on paper, perhaps, but in real life freedom was hijacked by violence – first the civil war and then the crime caused by Maras.
Bitcoin offers various incentives, and El Salvador has realized that to continue attracting its enthusiastic diaspora to come home and Bitcoiners to invest in the country, it must first offer security. The goal is to eliminate crime and insecurity, to make crime a less tempting incentive and to show the population how adapting to a bitcoinized economy can lead to a better life.
To solve this problem, El Salvador has temporarily suspended individual rightswith the alleged intent of arresting dangerous gang members who are shaking down the population for “security” money or rent. In addition, the National Assembly amended the Criminal Code to increase the penalty for gang-related activities. These moves have brought considerable criticism, but it seems that for the average Salvadoran, the suspension of these rights was justified – a poll found that 91% of Salvadorans support the so-called “state of exception”. This may be because they are finally experiencing the peace and tranquility that was promised in 1992 when the peace agreement was signed.
At the time of this writing, there has been a reported 190 days without a murder in El Salvador, which would transform it from the most dangerous country in the world to one of the safest in Latin Americaaccording to Bukele.
When it comes to El Salvador, don’t trust, verify
Of the world’s 195 countries, El Salvador is the only one that has been truly orange-pilled and will find itself on the right side of Bitcoin’s history. It had an incredible and challenging first year, but it has provided a template for the world to follow. Far from a failure, several countries are now closely following the experiment. However, the hardest parts of this climb to the top of the volcano are far from over, as El Salvador continues to tackle adoption challenges as it strives to issue its Bitcoin bonds and build its Bitcoin City.
But for those still wondering: The best way to gauge whether the introduction of bitcoin as legal tender has been positive is to go down there yourself. Don’t trust, verify.
This is a guest post by Jaime García. Opinions expressed are entirely their own and do not necessarily reflect the opinions of BTC Inc or Bitcoin Magazine.
