Thursday, December 2

The crypto-Salvador, the first days of an experimental country | Economy


These days the most expensive hotels in the capital of El Salvador, but also the boutique hotels for surfers on the coast, have been filled with young people with an American accent who arrived to closely follow the landing of the cryptocurrency. They walk like a cult in T-shirts that have a capital orange B across the chest. Sometimes the giant B is followed by the word bitcoin and other times by the word Bukele, aware that a large part of the currency’s success depends on what happens in the small Central American country.

Although for many experts Nayib Bukele is playing Monopoly with public finances, for cryptocurrency enthusiasts the president millenial The 40-year-old has become a benchmark for bravery and daring since Jack Mallers, creator of Strike, a bitcoin payment platform, gave him his blessing. That June 6, during a conference in Miami, Mallers – a 27-year-old in a cap, rapper’s sweatshirt and sneakers – wept before hundreds of people explaining all the good things that cryptocurrency can do for poor children. The star moment of the gala It came when, in a recorded message, Nayib Bukele announced that bitcoin would be legal currency while the audience broke into applause and cheers stood up as if it were a baseball game in which the batter had just thrown the ball out of the stadium . A few days later, a law written in three pages was approved that completely changes the economic direction of one of the poorest countries on the continent.

A surfer on the beach of Puerto de La Libertad.  This place has become an attraction for tourists thanks to the use of cryptocurrency.
A surfer on the beach of Puerto de La Libertad. This place has become an attraction for tourists thanks to the use of cryptocurrency. Victor Peña

Three months and 5,000 kilometers away from that, Jorge Ovidio Ramírez, 55, sells freshly milked goat’s milk in the center of San Salvador and the most modern thing that he has at his side is the umbrella. The last hooded youths and rapper shirts who approached him tried to assault him. “That issue is not for us poor people,” he says skeptically. And he ends: “Nobody gives money just like that.” A few steps from the goatherd, on Arce Street, Yesenia Ríos sells shoes: “I don’t even know how to use the phone. It is my son who teaches me. I thought that this currency already worked in other countries, but now I find out that we are the first to use it. Who knows what that man (Bukele) used to put that on ”.

Bitcoin, the highest value cryptocurrency on the market, was created in 2009 by Satoshi Nakamoto as a means of payment. Nakamoto also invented technology blockchain that serves as a support to manage transactions in bitcoins. The currency was designed to make its operations anonymous and private, leaving it out of the control of governments.

Pastor Jorge Ovidio with his goats in downtown San Salvador.
Pastor Jorge Ovidio with his goats in downtown San Salvador.
Victor Peña

El Salvador is the perfect test tube for the experiment. With about 6.5 million inhabitants, 70% of the population does not have a bank account and the country’s main source of income is the remittances they receive from their relatives in the United States. According to Bukele, the arrival of bitcoin will generate employment and the financial inclusion of thousands of people who are outside the formal economy. “Bitcoin has a market capitalization of $ 680 billion. If 1% were invested in El Salvador it would increase its GDP by 25% ”, he argued on Twitter.

The Bitcoin Law that came into force obliges any merchant to accept payments in this currency, but the Government’s contradictory statements have caused confusion. On Tuesday, when the application was launched, Bukele gave each Salvadoran $ 30 in bitcoins to encourage their use and 200 ATMs have been distributed throughout the country to convert them into dollars. This Friday, bitcoin had fallen and Salvadorans no longer had $ 30 but 26, but if those same Salvadorans had bought $ 1,000 in bitcoin in June, they would have $ 1,280 today.

Among experts there are more doubts than certainties about the behavior of a currency that rises and falls at high speed in a short time and is rejected by the World Bank, the International Monetary Fund and China, among others. The price has fallen from $ 52,000 to $ 30,000 since April and is exposed to circumstances as abstract as Elon Musk, the founder of Tesla, expressing his doubts about virtual money and then backtracking. In a country that needs the oxygen of international organizations to carry out its public accounts, the slam of the door can be the definitive collapse of the economy or the engine that takes El Salvador out of backwardness at the hands of a visionary.

Lady Drag protests against Bitcoin, during a march held in San Salvador, on Tuesday, September 7, the day the new virtual currency came into effect.
Lady Drag protests against Bitcoin, during a march held in San Salvador, on Tuesday, September 7, the day the new virtual currency came into effect.Victor Peña

On the street, the decision of Bukele, the Latin American president with the highest popularity rating, has sparked the first protests after two and a half years of romance. For the first time, Salvadorans do not look favorably on the path marked out by their president. Last week almost a thousand people protested against bitcoin and three polls they confirmed that the majority of Salvadorans rejected the currency, although they hoped that its use would be voluntary. However, the old shepherd who sells each glass of freshly milked milk for a dollar is also suspicious: “They say its use is optional, but the same happened with vaccines. At first they were voluntary and now they ask you for it for any management ”, he argues.

Among those who see Bukele as an arsonist who plays with public accounts is Steve Hanke, a Johns Hopkins University economics professor and former adviser to several US presidents. According to Hanke, who describes Bukele as a “compulsive liar”, the bitcoin adventure “will end in complete disaster” and gives as an example article 7 of the Bitcoin Law that states that it is mandatory. “Then he says himself: ‘Don’t worry because we’re not really going to enforce that.’ So he has a bitcoin law and announces that he will not comply with one of the articles. So everything depends on their interpretation and that is really what nobody likes in economics, ”he explains in an interview with EL PAÍS.

Across the street, Emily Parker, editor-in-chief of Coindesk, one of the media specialized in cryptocurrencies, defends that the arrival of bitcoin – observed in the region by several countries that closely follow the measure – “can help Latin America where there are low levels of banking as well as facilitate the sending of remittances from cheap and fast way ”. On the impact on the bitcoin community, Parker admits that it is divided. “On the one hand there are people who believe that it is a victory and an important step towards the globalization of cryptocurrencies and, on the other, there are critics who believe that the spirit with which it arose by forcing its use is violated, because it is a currency decentralized that no government should control ”, responds to this newspaper.

Roxana Valles inside her business where she has two different systems for charging with bitcoin
Roxana Valles inside her business where she has two different systems for charging with bitcoinVictor Peña

As divided as the experts are the users. Lying in a hammock at the entrance to her store, Roxana Valles, owner of The zonteña, a small grocery store located in El Zonte, 45 minutes from the capital, spends the afternoon serving neighbors without leaving his phone. A few meters from the counter some of the best waves in the world break according to surfers, and there is also the first ATM in the country that converts bitcoin into dollars. “At the beginning of the year I bought $ 900 worth of bitcoin and within 26 days I had made $ 500, so I withdrew it from the ATM and was able to invest in my store, he says, pointing to a shelf full of chips. Three months later I did the same. He had made $ 500 and had already recouped the investment. Now I already have 2,094 dollars saved, ”he says, showing his phone. On a day like today at five in the afternoon he has sold almost $ 40 worth of products ranging from a tomato to some cookies, and a third of the buyers have paid in bitcoin. And what is the conclusion? I sell more than her, ”she replies, pointing to the store next door, where her neighbor waits hand over hand for more customers to arrive. In the time that the conversation lasts, his virtual currency has risen another 15 cents while he continues to describe the virtues of his new currency from the hammock.

Roxana Valles shows the platform she uses to charge her clients in bitcoin
Roxana Valles shows the platform she uses to charge her clients in bitcoinVictor Peña

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