El Salvador: BTC a Tool to Liberate the Nation From Fiat Currencies

[TomPluz]

More of this El Salvador-Bitcoin development here.

El Salvador’s bitcoin roadmap might include a deeper integration of the crypto asset as part of its economic future. Felix Ulloa, Vice-President of El Salvador, recently stated that bitcoin might become a tool to liberate El Salvador from using fiat currencies, including the U.S. dollar.

Ulloa highlighted the role of bitcoin in the rebirth of the Salvadoran economy, reinforcing the link between crypto and the tourism industry. In October, he assessed that “tourism and the use of digital currencies go hand in hand and are a sign of that future and the rebirth of our country.”

I remember the time when IMF warned El Salvador that its adoption of Bitcoin can be so risky to the country's economy and even demanded to change its stance on Bitcoin in exchange for loans and yet "the IMF report applauded the growth of the Salvadoran economy by 2.8% in 2022. It cited the government's effective pandemic response, the "unprecedented" crime reduction and the strong tourism revenues."

Though I would say that the use of Bitcoin in El Salvador has not yet reached on a massive success level, there is no question that they have started to get freed from the shackles of both internal and external forces out to control this small country's destiny.

I am then hoping that as years go by, we can witness the many advantages of using Bitcoin as a national currency in El Salvador. Do you see a great future of Bitcoin in El Salvador say within 5 or 10 years from now or do you see a great future of Bitcoin but without El Salvador on the scene?

[Stompix]

Though I would say that the use of Bitcoin in El Salvador has not yet reached on a massive success level, there is no question that they have started to get freed from the shackles of both internal and external forces out to control this small country's destiny.

Unfortunately behind all that there is a grim reality of what a populist government does, so we need to check some facts.

1) Everyone was thrilled how supposedly Salvador paid its maturing debt out of the blue but ignored how this was paid, 450 from Central American Bank for Economic Integration and 100 million from Inter-American Development Bank
https://latinfinance.com/daily-brief/2023/01/18/idb-grants-loans-to-el-salvador-argentina/
2) Salvador issued another 1.5 billion in bonds a month ago:
https://www.reuters.com/world/americas/el-salvador-congress-approves-15-bln-debt-issuance-2024-05-22/
3) Bukele actually said he was in deep talks with the IMF
El Salvador Bonds Soar After Nayib Bukele Tells Investors He’s Working With the IMF
4) This is the cherry on the cake:
https://www.globalcapital.com/article/2d44tmst4n3d8s0mkk4jk/people-and-markets/comment/el-salvadors-bond-is-innovation-for-all-the-wrong-reasons

El Salvador is returning to global debt markets with a dual-tranche offer, including a bond that will pay investors a higher interest rate unless the government can win credit upgrades or a deal with the International Monetary Fund.
This will pay investors 0.25% for the next 18 months. After that, this rate will jump to 4% for the rest of the bond's life, unless El Salvador has met one of two conditions. Either it must agree a new deal with the International Monetary Fund, or it must be upgraded from B-/CCC+ to B/B.

Bitcoin can provide one with freedom, it can provide one with returns, but it can only do that much, it won't help if somebody is running the country into the ground based on a relly, but really bad plan. You mentioned growth, problem is that the growth which might still great by what first world countries do was the worst for two consecutive years in Central America:

Guatemala  4.1%  3.5%
Panama  10.8%  5.1%
Honduras 4%   3.2% 
Salvador 2.6%  2.7%
Nicaragua 3.8%  3.1% 
Costa Rica 4.6%  4.1%
Belize 8.7% 4.2%

I would say Bitcoin is much like an antivirus, it can protect you perfectly but if the user is simply bent on doing stupid things no antivirus in the world will be able to save your ass once you disable it and download cracks from darknet website.
It's going to free the citizens of Salvador, but the country itself, that's a different thing!

ps: I understand that the article is written with russia today sources and obviously biased but they should at least get the dates right.

El Salvador adopted the U.S. dollar in 2020,

It was 2001,

[Faisal2202]

Though I would say that the use of Bitcoin in El Salvador has not yet reached on a massive success level, there is no question that they have started to get freed from the shackles of both internal and external forces out to control this small country's destiny.

You are right it was not a massive success for El Salvador, I think it would be massive if foreigners from all around the world would take it as a crypto-friendly hub and then they might invest in good projects there as well. It would only be possible if the developers of El Salvador would have some investment opportunity for foreigners like some good project.

As a crypto-friendly country, investors would happily invest in it. Overall, Speaking od the economic situation, I hope it will not change for the country again, and even if it changes the country have to diversify their investments so the economy won't get affected that much. We all know market is highly volatile.

[Lucius]

@Stompix actually showed the reality that is often overshadowed by showing some great future that awaits ES because they "legalized" BTC, and at the same time the number of people using it is very small - regardless of the constant talk about how tourists come to ES precisely because they can pay with BTC. The fact is that very few people choose this payment option, and mostly it is about transactions of small value.

The problem with using BTC as a national currency is its volatility and I don't see how any country could function in a way that has BTC as its only currency.

[Aanuoluwatofunmi]

The moment we started to realized the potential in us and the delivery capacity of what we can offer to ourself and the world, we are not going to be intimidated by those who offer us nothing than to enslave us under their regulations and always make us dependent of their economy system and policies, in case of El-Salvador, they have realized this earlier and that is because they are having the right president who could effect every necessary change that could affect the lives of every individuals in the country, they could listen to IMF then and today, they are happy in their decision.

[yhiaali3]

It is certain that the adoption of Bitcoin has brought some economic improvement to El Salvador by diversifying economic options, attracting tourists, and some investments here and there, but not to a sufficient extent, and Bitcoin will not be the magic solution for any country suffering from major economic problems.

It is very difficult at the present time to adopt Bitcoin as a major national currency alternative to the dollar because of its great volatility and also because of the high fees that citizens may have to pay to buy some small items.

But despite all this, I am optimistic that through continuous work to develop the experiment and avoid errors and problems, the experiment can achieve some important successes in the future.

[SamReomo]

The problem with using BTC as a national currency is its volatility and I don't see how any country could function in a way that has BTC as its only currency.

I think you're right, the volatility of Bitcoin won't allow any country to use it as its main currency because in bear market Bitcoin loses its value while in bull market it gains value.

The loss of value in previous bear market was so intense and that let Bitcoin to reach values of $16k while in this bull run it crossed the value of $73k and it can go over that when this bull run gets intense.

Even on daily and weekly basis Bitcoin gains and losses value and if it becomes the main currency of a country then it will be almost impossible to use it on daily basis as one can use fiat.

[TomPluz]

You are right it was not a massive success for El Salvador, I think it would be massive if foreigners from all around the world would take it as a crypto-friendly hub and then they might invest in good projects there as well. It would only be possible if the developers of El Salvador would have some investment opportunity for foreigners like some good project.

I am sure El Salvador is already thinking along that line when they saw some good success with its tourism with the use of cryptocurrency and I think they can start in there and build more on that. I understand that the government of Nayib Bukele has many plans on the table and are just waiting for implementations including that grand plan to use power coming from a volcano or geothermal energy for miners to come to El Salvador which can be opening more opportunities for the country to enjoy. As it is, managing a country even a small one can be a challenging task and for sure there will be ups and downs and of course there will be others who will not agree with the government and the things it is doing. At the end of the day, what is important is that the government is working for the people and not the interest of external forces.

[Faisal2202]

I am sure El Salvador is already thinking along that line when they saw some good success with its tourism with the use of cryptocurrency and I think they can start in there and build more on that. I understand that the government of Nayib Bukele has many plans on the table and are just waiting for implementations including that grand plan to use power coming from a volcano or geothermal energy for miners to come to El Salvador which can be opening more opportunities for the country to enjoy. As it is, managing a country even a small one can be a challenging task and for sure there will be ups and downs and of course there will be others who will not agree with the government and the things it is doing. At the end of the day, what is important is that the government is working for the people and not the interest of external forces.

Yep, they are thinking along this line as well, I just read there six projects and three of them are already in progress and made them some benefit. I liked there project of Volcano mining, which is cheap and yeah it will really attract foreigners to spend money in this country to set up their own rigs. If governments allowed it. Out of these six projects, one is Bitcoin Citizenship, they are asking for $1 Million in BTC to give you lifetime of residency in El Salvador, I think if we see the bigger picture.

If El Salvdaor become a successful entity in future then I think $1 Million is not a big deal, but for now, I think its a little expensive. Plus I have seen a lot of cyber attacks on El Salvador, as hackers are sharing there ATM's OS code, There buses, schools, students information in Darkweb and forums. I have seen those data (but can't confirm the authenticity due to lack of self-knowledge). But I am pretty sure they really need expert in the field of Cryber Security.  (Source to 6 plans)

[taufik123]

The country of El Salvador is a vivid example of how bitcoin is used properly, as it is for the primary use for legal tender.
But even so, the risk will indeed occur.

In Elsalvador, there are pros and cons to Bitcoin adoption, but President Bukele assured his people not to worry because Bitcoin will give them profits and Bitcoin investment El-Salvador is now successful and the first country to have a lot of bitcoin assets and Bitcoin mining that uses geothermal power.

[Captain Corporate]

I mean they are not fully wrong, USA is controlling the whole world with its usage of Dollars on everything as much as it can, the whole world sees dollar as a reliable currency, you can go to whole world, any place, any small island, or any huge nation and if you have dollars, you can find an exchange to get the local currency. But that causes a lot of trouble for smaller nations, and if they can peg their interest against dollars, then they are going to do better. We are going to see bitcoin go higher than dollars, so if El Salvador invests heavily into bitcoin, they are going to get richer compared to dollar value.

[Aanuoluwatofunmi]

Very soon now, we are going to be having bitcoin dominance just as the fiat currency have always been, we don't have to rush on this with bitcoin, instead we are taking over gradually by the increasing level of its adoption all over the world, people already have seen the relevance in the use of bitcoin as a currency and an asset for their investment, but not only that, its seen as a profitable one which also have a multi facet applications on where it can be used, for what it can be used and how it can make the required and effective changes needed. 

[Kemarit]

Though I would say that the use of Bitcoin in El Salvador has not yet reached on a massive success level, there is no question that they have started to get freed from the shackles of both internal and external forces out to control this small country's destiny.

You are right it was not a massive success for El Salvador, I think it would be massive if foreigners from all around the world would take it as a crypto-friendly hub and then they might invest in good projects there as well. It would only be possible if the developers of El Salvador would have some investment opportunity for foreigners like some good project.

As a crypto-friendly country, investors would happily invest in it. Overall, Speaking od the economic situation, I hope it will not change for the country again, and even if it changes the country have to diversify their investments so the economy won't get affected that much. We all know market is highly volatile.

It depends on what kind of investments though, if it will be bitcoin mining could be good but the government will have to subsidized the electricity and I'm not sure how El Salvador capacity to supply Bitcoin miners or if they themselves, the government has the total monopoly of bitcoin mining.

And still we have to think for the long term, yeah, Bukele could have won his re-election, but for sure he can't stay that long as he will be a dictator. Unless the one that will run the country next is under his political affiliations, then Bitcoin for them is still going to be in the gray area as for now it is being attached to who is going to be the next and future President of the country.

[snowpega]

<Snip>

Yes, Dear, if we see El Salvador is very bullish on Bitcoin, where once i have read a news where El Salvador President announced that the government will keep buying bitcoin until it is affordable or they have sufficient fiat to buy bitcoin, and from these we can get an idea of how much El Salvador is bullish on Bitcoin. This thing encourages other investors to invest in their country and many are interested to hold the nationality of El Salvador Especially Crypto Lovers.

Besides this, i have seen some videos on the Social platform where kids are paying their food bills using Bitcoin Payment method and this thing also promotes the adoption of the bitcoin around the world on social platform. Many may inspire with this idea and on the same side if we focus on another point which is Bitcoin is becoming more adoptable in America also as President Trump also supporting this at that time so we may see Good days of Crypto very soon. All depends!

[Z-tight]

The reality is that people in El Salvador do not really use BTC, so many of them only downloaded the Chivo wallet, because of the $30 that was attached to it. We have to wake up to the reality that BTC was not created to solve the problems of countries, and it is an alternative currency to fiat. BTC has its original purposes and if people actually understand it, they would not expect so much from it.