El criptoSalvador, the first days of a country of experimentation | Economy

Nowadays, the most expensive hotels in the capital of El Salvador, but also the boutique hotels for surfers on the coast, have filled up with young people with American accents who have arrived to follow closely the landing of the crypto. cash. 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, knowing that much of the currency’s success depends on what happens in the small Central American country.

Although for many experts Nayib Bukele plays Monopoly with public finances, for cryptocurrency enthusiasts, the president millennium 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. On June 6, at a conference in Miami, Mallers – a 27-year-old wearing a cap, rapper sweatshirt, and sneakers – cried in front of hundreds of people explaining all the good things cryptocurrency has to offer. can do for poor children. The highlight of the gala came when, in a recorded message, Nayib Bukele announced that bitcoin would be legal tender as the audience cheered and cheers rose as if it was a baseball game. in which the batter had just finished. ball outside the stadium. A few days later, a three-page law was approved that completely changes the economic focus of one of the poorest countries on the continent.

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

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

El Salvador is the perfect test tube for the experiment. With around 6.5 million people, 70% of the population does not have a bank account, and the country’s main source of income is the remittances they receive from loved ones in the United States. According to Bukele, the arrival of bitcoin will generate jobs and financial inclusion for thousands of people who are outside the formal economy. “Bitcoin has a market capitalization of $ 680,000 million. If 1% were invested in El Salvador, that would increase its GDP by 25%,” he argued on Twitter.

The Bitcoin law that went into effect requires any merchant to accept payments in that currency, but conflicting government statements have caused confusion. When the app launched on Tuesday, Bukele handed each Salvadorian $ 30 in bitcoins to encourage their use, and 200 ATMs were distributed across the country to convert them into dollars. This Friday, bitcoin had fallen and Salvadorans 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 risen from $ 52,000 to $ 30,000 since April and is exposed to such abstract circumstances as Tesla founder Elon Musk voicing 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 slamming of the door may be the definitive collapse of the economy or the engine that pulls El Salvador out of its backwardness in the hands of a visionary.

On the street, the decision of Bukele, the most popular Latin American president, sparked the first protests after two and a half years of romance. For the first time, Salvadorans take a dim view of the path mapped out by their president. Nearly a thousand people protested against bitcoin last week, and three polls confirmed that the majority of Salvadorans rejected the currency, even though they expected its use to be voluntary. However, the old shepherd who sells every glass of freshly milked milk for a dollar is also suspicious: “They say its use is optional, but the same has happened with vaccines. At the beginning they were volunteers and now they ask you for any management, ”he argues.

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

Across the street, Emily Parker, editor-in-chief of Cash, one of the media specializing in cryptocurrencies, argues that the arrival of bitcoin – seen in the region by several countries that are closely monitoring the measure – “may help Latin America where there are low banking levels as well as facilitate the sending of funds from a cheap and fast way ”. Regarding the impact on the bitcoin community, Parker admits that she is divided. “On the one hand, there are people who believe that this is a victory and an important step towards the globalization of cryptocurrencies and, on the other hand, there are critics who believe that the spirit with which it was born by forcing its use and being violated, because it is a decentralized currency that no government should control, ”the newspaper replies.

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 your phone. A few feet from the counter some of the best waves in the world are breaking according to surfers, and there’s also the country’s first ATM that converts bitcoins into dollars. “At the start of the year, I bought $ 900 worth of bitcoin and in 26 days I had earned $ 500, so I took it out of the ATM and was able to invest in my store,” he says. he pointing to a shelf full of tokens. . Three months later, I did the same. He had won $ 500 and had already recouped the investment. Now I’ve saved $ 2,094 already, ”he says, and shows his phone. On a day like today at five in the afternoon, he sold for almost $ 40 worth of products ranging from a tomato to a few cookies, and a third of the buyers paid in bitcoin. And what is the conclusion? I sell more than she, ”she replies, pointing to the store next door, where her neighbor waits hand in hand for other customers to arrive. As the conversation lasts, his virtual currency has increased another 15 cents as he continues explaining from the hammock.

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