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On Sunday, February 4th, the presidential election in El Salvador will determine whether Nayib Bukele and his Bitcoin revolution experiment will continue to shape the country's future.
Since Nayib Bukele became the president of El Salvador in 2019, he has garnered considerable support, becoming the first person independent of the two major U.S. parties to win since 1984. However, what has brought his government into global discussions is his support for Bitcoin. In September 2021, Bukele elevated Bitcoin to legal tender, creating a historic moment globally. Since then, El Salvador's radical Bitcoin experiment has attracted worldwide attention.
While this interest has been largely negative, especially from financial and media institutions worldwide, the Bitcoin law took effect just weeks before Bitcoin experienced a significant drop from its all-time high. This fueled speculation that the government might incur substantial losses. Moreover, international financial institutions like the International Monetary Fund repeatedly urged El Salvador to abandon its project, increasing the likelihood of the country being unable to secure loans. However, by 2024, the government's investment in Bitcoin reserves has not only remained steadfast but major financial institutions have reluctantly acknowledged El Salvador's economic strength. From this perspective, critics of the country have been overturned. However, a more direct test is looming: Bukele's re-election.
In an interview on January 31st, Bukele's running mate, Felix Ulloa, emphasized that re-election would mean a renewed commitment to Bitcoin. Despite revealing that the International Monetary Fund has quietly reiterated its request for El Salvador to drop Bitcoin, Ulloa insists that these requests are being ignored. He told Reuters that a significant source of strength comes from the rise of ETFs in the United States. Such a major victory implies that Bitcoin "enjoys the greatest credibility worldwide." Ulloa claims not only will the existing laws supporting Bitcoin be maintained but also the proposed "Bitcoin City" infrastructure project continues to receive full government support.
As for opinion polls, various international news agencies believe Bukele's victory is practically assured. His popularity seems unrelated to Bitcoin, as a significant portion of the population still does not trust it. Instead, his comprehensive crackdown on gang activities appears to be the main reason, leading to a drastic drop in El Salvador's murder rate from a shocking 105 per 100,000 residents in 2015 to the region's lowest at 7.8. In other words, his voters like him a lot, but so far, they hold conflicting views on the Bitcoin initiative. Such conditional support could be risky, as future economic difficulties may turn this indifference into outright rejection. However, based on all the poll results, Bukele is likely to have another term to convince his people.
Fortunately, there are widespread plans to deepen these connections in various areas of life. The use of international currencies like Bitcoin has attracted a flow of international spending, leading to a boom in the country's tourism industry in recent years. In addition to these more casual cash inflows, the government also allows foreign nationals to obtain citizenship directly through Bitcoin investment, encouraging more permanent immigration. These efforts to raise foreign funds are sure to impact the country's citizens, but they are also working to create job opportunities directly for this emerging industry.
Since October, El Salvador has collaborated with several companies to establish geothermal-powered mining infrastructure. Bitcoin mining is a growing market globally, and the use of green energy easily sidesteps the most common criticisms. These goals of creating domestic job opportunities and attracting foreign investment fall under the umbrella of the aforementioned "Bitcoin City" project, whose long-term goal is to cultivate various jobs in software development and blockchain engineering related to digital assets.
If El Salvador's voters indeed decide to re-elect Bukele on February 4th, he will face the formidable task of ensuring the lasting presence of Bitcoin. So far, many of his citizens either gain additional income from international travelers interested in Bitcoin or participate in building new Bitcoin pools for mining. While the economy is growing, it is not enough to make his people believe in the full potential of a radical new economic future. Nonetheless, he has won their favor because his government has consistently received strong public support. In other words, the likelihood of re-election is high, and this experiment will continue during his second five-year term. However, the main challenge over these five years will be to ensure that Bitcoin becomes a living reality for his people. Despite the apparent difficulty of this task, he has already normalized Bitcoin in various ways.
For example, since last year, the country has partnered with one of the largest distributors, enabling many businesses to accept Bitcoin for ordinary transactions. Furthermore, these normalization efforts have extended beyond El Salvador's borders. While El Salvador needs support from its citizens, it also hopes to encourage other countries to provide broader support. The Central African Republic (CAR), directly inspired by El Salvador, became the second country to adopt Bitcoin as legal tender. However, in a country where approximately 90% of the population lacks internet access, this effort was unsustainable and was shut down in 2023. The Central African Republic is not the only country influenced by Bukele's initiatives, as during Argentina's latest presidential elections in November last year, Bukele actually dispatched a "Bitcoin ambassador" team to Argentina. Such diplomatic efforts will significantly contribute to ensuring El Salvador becomes the first country to accept Bitcoin as legal tender but certainly not the last.
Some of these initiatives highlight the starkly different goals of El Salvador's Bitcoin project compared to the ETF battle in the United States, although Salvadorans like Vice President Ulloa are naturally encouraged by its victory. An ETF is a financial instrument that allows ordinary Americans to indirectly profit from Bitcoin's success, while Bitcoin has a radical vision of empowering anyone in the world to control their economic destiny. Nayib Bukele has shown a genuine interest in integrating Bitcoin as part of everyday life, and his efforts to encourage economic development in various ways and his attempts at international promotion demonstrate this. Our community needs warriors like those fighting for the ETF battle, but it is crucial to remember that Bitcoin is not just a way to earn fiat currency. If Bukele has the chance to truly integrate Bitcoin into Salvadoran society, it will show the world what success Bitcoin can bring to all of us. |
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Post time 18-2-2024 15:29:25