El Salvador's Bitcoin Revolution: Two Years as Legal Tender
Two years have passed since El Salvador made history by becoming the first country to adopt Bitcoin as legal tender. In that short span, the nation has undergone remarkable changes and improvements. While some might consider it a mere coincidence, the most plausible explanation lies in the profound transformations initiated by the country, with Bitcoin at the heart of its rebranding and a notable shift in attitude among its citizens. This article explores the impact of Bitcoin’s legal tender status on El Salvador’s development, the challenges it has faced, and the broader implications of this groundbreaking decision.
The Challenges and Public Perception
El Salvador’s history has been marred by centuries of adversity and struggle, but its current generation of citizens is determined to break free from that dark past. New leaders have emerged with a resolute commitment to improve their country. This newfound resolve has been instrumental in the progress witnessed in El Salvador, triggered by the decision to embrace Bitcoin as a legal tender.
Despite the improvements brought about by Bitcoin, a recent poll revealed that Salvadorans rank the Bitcoin law as the lowest achievement of the Bukele government. This does not necessarily indicate disapproval but underscores the fact that other pressing issues have a more direct impact on their daily lives. This realization aligns with a fundamental lesson from Bitcoin – that achieving meaningful change requires hard work, dedication, and a focus on the long-term rather than shortcuts.
Many have wondered aloud if the Bitcoin project would fail if Bukele were not able to achieve a second term or after he decides to leave the presidency. Critics believe Bitcoin would fail if his leadership were not driving the economic agenda. However, what many fail to realize is that the country did not change because of Bukele alone but because he had the support of the people who gave him a mandate to transform the country and because he assembled a team of competent leaders who are happy to take the relay baton once their time comes.
Choosing to adopt Bitcoin was not easy for El Salvador, especially in the face of pressure from the IMF, the U.S. government, and various financial entities threatening to halt foreign aid and loans. Immediately after the adoption, the country’s bonds were downgraded to junk status, with no demand. However, El Salvador has since fulfilled its bond obligations and seen its bonds become one of the most promising investments. While these financial maneuvers may not directly impact the average Salvadoran, other developments certainly do.
The country has experienced a boom in tourism, increased real estate activity, and significant infrastructure upgrades, including new roads, airport enhancements, and the establishment of a new ferry route to Costa Rica. These tangible improvements have not only enhanced the country’s attractiveness but also provided opportunities for its citizens.
El Salvador’s introduction of its digital assets law, favorable tax incentives for tech companies, and a landmark agreement with Google have motivated the company to base some of its Cloud services in the country. This move signifies growing confidence in El Salvador’s business environment and its potential as a Latin American tech hub.
Another exciting development on the Bitcoin front is the entry of Volcano Energy into the mining arena. This forward-thinking company has invested a staggering $1 billion USD to set up a mining operation that taps into wind and solar power. Furthermore, they plan to harness the volcanic energy of the country for Bitcoin mining, utilizing its geothermal potential. This initiative not only showcases El Salvador’s commitment to sustainable Bitcoin mining but also attracts significant foreign capital to the country.
In a move that underlines El Salvador’s growing importance in the global financial ecosystem, both Bitfinex and Binance have sought out regulatory stability to set up their exchanges and operate within the country. This signifies a recognition of El Salvador’s dedication to fostering a supportive business environment.
Perhaps the most fundamental achievement has been the government’s success in addressing the country’s security issues. El Salvador, once the worst country in terms of murders per capita, has now become the safest in the Americas. This transformation, although met with criticism and accusations of dictatorship, has significantly improved the daily lives and human rights of Salvadorans.
These accomplishments have resulted in widespread public approval of President Bukele and his government, who now hold the highest approval ratings in the world. This support may translate into a second presidential term and a strengthened legislative assembly majority, crucial for passing laws, including those related to Bitcoin.
The U.S. has also shifted its stance, appointing a new ambassador who has given a favorable review of El Salvador, marking a notable change in its relationship with the country after years of criticism. While this move may be far from American acceptance of El Salvador’s Bitcoin Law, it signals some sense of tolerance. As the U.S. re-embraces El Salvador as a trusted partner, it significantly reinforces the government’s security and economic development efforts as local opportunities contain illegal immigration.
Educational Initiatives: My First Bitcoin and CUBO+ Program
In terms of more advanced education, a program known as CUBO+ aims to train developers in Bitcoin programming. This initiative is essential for adopting Bitcoin, as Salvadoran developers should understand and have a say in developing core Bitcoin code. Students in the CUBO+ program have been selected through a competitive meritocratic process and taught by industry experts like Jimmy Song, Pierre Rochard, and Saifedean Ammous. Notably, Saifedean Ammous has also been newly appointed as an economic advisor to the Salvadoran government, underlining the government’s commitment to fostering expertise in the Bitcoin space.
While the average Salvadoran may still need to start using Bitcoin in daily transactions, the ethos and work ethic intrinsic to Bitcoin – proof-of-work – have reshaped the country’s trajectory. El Salvador remains the only nation where Bitcoin is legal tender, making it an attractive destination for companies seeking to develop their Bitcoin-based businesses. As El Salvador continues its journey as a developing economy, the hard choices made in the past two years have laid a solid foundation for a brighter future. The world watches with keen interest, and one fact remains undeniable: El Salvador is Bitcoin Country, and its Bitcoin revolution is here to stay.