El Salvador’s Year With Bitcoin Currency Has Been ‘Spectacular Failure’
Shots have been fired.
Uncool dictator
It’s been about a year since El Salvador’s President Nayib Bukele, Crypto Bro and self-described “world’s coolest dictator” moved to incorporate Bitcoin as an official state currency. Spoiler alert: it hasn’t exactly gone well. Indeed, in the words of Canberra University economist John Hawkins, the great crypto experiment has been nothing short of a “spectacular failure.”
“Now, a year later, there is more than enough evidence to conclude that Bukele had no idea what he was doing,” Hawkins wrote in a recent column for The conversation.
Bitcoin City
Bukele’s Bitcoin experiment centered around an idealized “Bitcoin City”, financed through an imagined $1 billion government bond program. The country was to invest half of that billion in the city itself, and the other half was to go against Bitcoin investments. These Bitcoin acquisitions, according to the president, will eventually lead to economic growth.
Unfortunately, the promised economic boom has not yet materialized.
In fact, as Hawkins explains, the bond program has yet to be implemented at all. Bukele, meanwhile, has poured in about $100 million in Bitcoin, which is only worth about half the investment right now. Elsewhere, gang violence has exploded, and the nation has fallen into confused economic turmoil.
Who gets hurt
Of course, the wildly disastrous Bitcoin crash didn’t lend itself to Bukele’s crypto-forward efforts. At the same time, Bukele himself has also failed to inspire much faith in his own financial prowess.
“Bukele’s misunderstanding of Bitcoin — and economics more generally — has been demonstrated repeatedly,” Hawkins continued, recalling instances when the president failed to demonstrate a solid understanding of how GDP works, or took to Twitter to share over-hyped, low-substance crypto-evangelism.
Hawkins is not the president’s only opponent. The International Monetary Fund (IMF) has begged El Salvador’s leader to scale back its crypto-forward legislation, arguing that the digital assets are still too volatile and unsafe for national use (Bukele fired back with IMF-bashing memes on Twitter).
There is no doubt that there has been serious damage to Cryptbro in Chief’s reputation. But that’s not what’s most important here: this has been an experiment, and a rather careless one at that, performed live on actual El Salvadorians. Should it continue its implosion, it will be the El Salvadoran people who bear the real cost of this failure.
READ MORE: One year later, El Salvador’s Bitcoin experiment has turned out to be a spectacular failure [The Conversation]
More on El Salvadoran crypto hell: An entire country has switched to Bitcoin, and now its economy is shaking
