The El Salvador Bitcoin experiment: how is it fairing six months on?
In September of 2021 El Salvador’s President Nayib Bukele made history when his country became the first in the world to make Bitcoin legal tender.
At the time, this move was met with mixed responses. From angry protests at home to criticism from the International Monetary Fund (IMF) the naysayers were loud, but for supporters in the crypto community, this was seen as an opportunity to further accelerate Bitcoin’s adoption and free El Salvador from the tether that is using USD as legal tender.
It’s now six months since El Salvador’s bitcoin experiment began and commentators remain mixed about how it’s fairing. In one camp is the IMF, which remains passionately critical of El Salvador, stating in a January press release that the Bitcoin experiment “entails large risks for financial and market integrity, financial stability, and consumer protection.”
However, President Bukele remains confident. Between comparing the IMF to Homer Simpson and boasting that he trades bitcoin naked, the President has pushed new projects, like the issuance of a Bitcoin bond.
The Bitcoin bond issue was scheduled for late March, but no such bond is yet to materialise. Blaming financial market conditions and the Russian-Ukrainian war, the issuance was postponed until further notice, but some commentators question whether the bond will ever eventuate.
Although the Bitcoin bond has suffered a false start, El Salvador’s Bitcoin buzz is accredited with driving an uptick in tourism. Government statistics suggest that tourism rates have surged 30 per cent since Bitcoin became legal tender, and this is certain to help improve GDP.
Whether President Bukele’s Bitcoin experiment will be remembered as a great success and the precursor for mass crypto adoption globally remains to be seen, but what can’t be questioned is his bold attitude and strong appetite for risk.