Bitcoin and Its Future in El Salvador

An article by Jung-Ju Lee and Samson Williams, on why Bitcoin may not be the saving grace for El Salvador as the country seems to project it will be.

Can Bitcoin Solve El Salvador’s Issues?

On June 5th, 2021, at the Bitcoin conference in Miami, El Salvador’s President Nayib Bukele announced that the country is in the process of adopting Bitcoin as legal tender.

This would make El Salvador the first country to deem Bitcoin an official national currency, but is this a precedent for the rest of the world to follow? To answer this you must take into account the political history of El Salvador and the geopolitics that led to over 25% of the population living on less than $5.50 USD per day.

Notably, El Salvadorians living on less than $5.50 is actually better than it was a decade ago in which 40% of the population were living on that. This connection of the country’s rate of poverty in relation to crypto and Central Bank Digital Currencies is significant.

The authors detail the main issues with El Salvador’s decision, mainly that only nations with weak economies and a fragile or turbulent currency consider Bitcoin as legal tender, without an alternative concrete or baseline currency already in place. Bitcoin does not address nor solves national debt for a myriad of reasons like accessibility, it does not solve unemployment or under-employment either.

Bitcoin also does not solve the climate crisis, deforestation, and land degradation that has made the country more and more susceptible to climate variability and extreme weather events in the last 30 years. Finally the poor will still be poor, as Bitcoin like any currency has to be earned, never mind the fact that advanced poverty adds more barriers to accessing Bitcoin like infrastructure or means to store safely, etc.

If not earned then the authors note they will have to discuss how Socialism has historically worked in Central and South American countries. This will all be part of an ongoing investigation with more articles to follow on dissecting El Salvador’s decision of “state-sanctioned money laundering”.

Samson Williams is an adjunct professor at Columbia University in NYC and UNH School of Law. When not exploring the realities of blockchain, cryptocurrencies, and The Space Economy Samson is President of the Crowdfunding Professional Association because Customers have more money than VCs.
Jung-Ju Lee is a senior research assistant on emerging technology at the Johns Hopkins Foreign Policy Institute. She has a B.A. from Cornell and M.A. from Johns Hopkins in International Economics and International Relations. Her research explores the geopolitical economics of chips and crypto.