🇸🇻Voice#07: Bitcoin Crash Isn't Affecting the Average Person in El Salvador
Bitcoin experiment in El Salvador: Is it a failure after the price crash?
The following article has been written in collaboration with a foreigner living in El Salvador to share his experiences and how he tries to navigate living in an inflated and unstable government.
I was born in 1987, and I am 35 years old. Most of my childhood was spent in the United States. For more than 10 years, I have lived in El Salvador with my family. I live with my wife and work for a company in the United States from my country.
What was the situation in El Salvador before cryptocurrencies?
Before cryptocurrencies, only the dollar was used as the official currency. In the years before 2019, two government parties were in the majority in the votes, but neither party improved the situation in El Salvador. Both political parties have been accused of dealing with the gangs.
On June 1, 2019, Nayib Bukele won the elections, representing his political party Nuevas Ideas (New Ideas). With this political change, a new era arises in the country, in which projects that previous governments had completely abandoned begin to continue. He also started new projects, one of which was making Bitcoin legal tender.
How was the transition to cryptocurrencies?
At first, many people started to strike against this new law that added Bitcoin as legal currency. Many news outlets interviewed regular people demonstrating.
One of the questions that were commonly asked was: “Why would you not like Bitcoin in El Salvador?” Many people on strike replied that they didn’t know what Bitcoin was.
Sometime later, investigations were carried out, and it was found that many people who made these demonstrations had received a payment to go and have Anti-Bitcoin posters in their hands.
When Bitcoin became legal tender, a special wallet called Chivo was created to keep Bitcoin in the economy. The government gave away $30 to everyone who registered with their ID. Many people criticized this, but currently, the application has about 3 million registered users, almost half of the population.
How are the people in El Salvador affected by the crash of Bitcoin?
One of the characteristics of the Chivo wallet is that Bitcoins and Dollars can be stored and used at the same time. The government added this flexibility so they don’t have to force everyone to invest in Bitcoin and thus lose their money.
In addition, the transactions can be made in Dollars or Bitcoins, and you can also configure which currency you want to receive transactions.
Many people had one of the main complaints that the president bought the “dip.” This term refers to buying a lot of cryptocurrencies when their value is very low in order to make more money when their value returns to a high point. In May 2022, Nayib Bukele bought 500 Bitcoins when the price was worth $30,744.
Then, by the end of June, the value of Bitcoin had dropped to $19,000 per coin. When Bitcoin had this value, Nayib Bukete made a Twit announcing that he had bought 80 more Bitcoins, at $19,000 each. Many people criticized this move yet again.
But at the beginning of August, Bitcoin rose to around $24,000. This somewhat calmed the lousy view of Nayib Bukele’s purchases of Bitcoins. But, the critics of the opposite political parties relentlessly complain.
But, it should be mentioned that these losses have not affected the El Salvadoran people. Nayib’s government continues to create projects such as hospitals despite these Bitcoin losses. The only people who have lost money are those who had their own money invested in Bitcoin.
Did you make money or lose money?
I haven’t lost any money as I don’t currently invest in Bitcoin. Many people think that creating a wallet that facilitates the investment in Bitcoin will make an entire country invest its money. But, I’m sure that most people in El Salvador don’t invest any of their money in Bitcoin.
Only 14% of El Salvador’s businesses have used bitcoin for transactions since it was launched in September, according to a March poll by the country’s Chamber of Commerce, and only 3% of those surveyed said they saw any potential commercial value.
First, many people in El Salvador don’t have enough resources to put money into Bitcoin and start investing. Another reason is that many people are not expert investors, and many decide not to risk their money.
Citizens took the $30 for the Chivo wallet but had not invested any more or less. That is why most citizens in El Salvador were not affected by the fall of Bitcoin.