The pending revolution: A year of bitcoin in El Salvador

San Salvador, Sep 6 (EFE).- A year after being proclaimed by President Nayib Bukele with great fanfare, the adoption of bitcoin as legal tender in El Salvador has yet to bring any of the promised benefits and the head of state’s former evangelism on behalf of cryptocurrency has been replaced by silence.

Polls showed that a majority of El Salvador’s roughly 6.5 million people were not happy to see their country become a cryptocurrency laboratory.

Supporters of the right-wing president pushed the bill through congress in June 2021, approving the use of more than $200 million in public funds to finance the program.

While Bukele touted bitcoin as a way to boost the pandemic-battered economy and benefit people who lack access to the banking system.

He also pointed to potential profits from cryptocurrency trading as a source of revenue for the government and said that by using bitcoin, Salvadoran expats who send much-needed money home to their families could avoid paying commissions on those remittances.

But Bukele’s rhetoric was not accompanied by any official blueprint for implementation beyond the initial legislation that enabled the “automatic and instantaneous convertibility” of bitcoin into United States dollars, which has been El Salvador’s legal currency for more than two decades.

And the president has not made any public comment about cryptocurrency since June 30, when he announced the purchase of 80 additional coins with public funds.

Weeks earlier, Bukele trumpeted the purchase of 500 coins at an average per-coin price of $30,744.

“El Salvador just bought the dip!” he said on Twitter at a moment when the price of bitcoin had fallen by more than 50 percent from its record high in November 2021.

June saw a crash in the cryptocurrency market and though bitcoin and other have rebounded to a degree, the price of bitcoin fell below $20,000 several times in July and August.

Since the launch in September 2021, the Bukele government has bought 2,381 bitcoin, created a digital wallet app known as Chivo, announced plans to build “Bitcoin City” and issued $1 billion in sovereign bonds backed by cryptocurrency.

But the Salvadoran public’s knowledge of these matters is limited to whatever the president chooses to share on Twitter.

“Everything that has been connected to the implementation of the Bitcoin Law has been full of opacity. A year after the law took effect, there are many things we, as civil society, still don’t know,” economist Jose Luis Magaña told Efe.

Given the government’s inability to state clearly what it hoped to achieve with the law, “it’s very difficult to be able to evaluate, to be able to say whether it has been successful or not,” he said.

El Salvador’s central bank forecasts the Central American nation will end 2022 with growth of 2.3 percent, in line with the long-term trend before Covid-19 and sharply below last year’s 10.3 percent expansion amid the economic recovery from the pandemic.

The numbers, according to Magaña, show no evidence that the introduction of cryptocurrency has spurred “a structural change in the economy.”

Cryptocurrency as means of exchange has not gained a foothold in San Salvador’s busy commercial district.

Payment in bitcoin “is totally minimal,” coffee shop operator Wilfredo Mendoza told Efe.

“Some foreigners pay in bitcoin, but among domestic customers it’s less,” he said. “Of 100 percent of customers, 0.05 percent is bitcoin.”

A jeweler who accepts cryptocurrency said that use of bitcoin is her establishment is sporadic. “There are days when nobody pays in bitcoin, but all the sudden someone does,” she told Efe.