How a currency created to eliminate the power of the State over the issuance and control of money is being used as political propaganda by an authoritarian regime.
El Salvador’s adoption of Bitcoin (BTC) as legal tender is nothing more than a ploy by President Nayib Bukele to divert the spotlight from his government’s authoritarianism and the country’s economic ruin towards the libertarian ideals of the largest cryptocurrency on the market, says an article published in The New York Times last week.
The text is signed by Salvadoran investigative journalist Nelson Rauda Zablah. Specialized in politics and human rights, he has been covering the implementation of the Bitcoin Law in the Central American country since the announcement of the measure in June of last year during the 2021 Bitcoin Conference in Miami.
In the text, Zablah recounts how a currency supposedly created to decouple money from state control ended up becoming a propaganda weapon for a regime opposed to its libertarian ideas.
Economic crisis
Bukele took over El Salvador in June 2019. If the country’s economy was already showing signs of fragility, the coronavirus pandemic made the situation even worse. When rating agencies began to question the government’s ability to honor the country’s debt, Bukele turned to the IMF (International Monetary Fund) to close a $1.3 billion refinancing deal.
Then came the unexpected announcement that the small Central American country would be the first to adopt Bitcoin as legal tender. Little more than a month passed between the announcement of the proposal and the implementation of the law, during which time the opinion of the Salvadoran population was largely ignored by Bukele, although demonstrations of opposition to the project took to the streets of the country. on more than one occasion.
When the Bitcoin Law went into effect, El Salvador’s total debt represented about 90% of GDP, much of which had been accumulated by previous administrations or spurred by pandemic-related spending. Therefore, Bitcoin alone cannot be blamed for the worsening of the country’s economic situation, but the fact is that the largest cryptocurrency on the market so far has not contributed to improving it either, writes Zablah.
Excluding the contributions made directly for the purchase of Bitcoin, the government has allocated 200 million dollars to launch the project, from the creation of the state infrastructure to connect the asset with the country’s financial system to the distribution of a bonus for value of 30 dollars in BTC to all citizens who adhere to the cryptocurrency through Chivo, the official digital wallet of El Salvador.
Apart from the viability of the investment, the benefits promised to the population do not seem to have materialized. One of Bukele’s main justifications for implementing the Bitcoin Law was to minimize the administrative costs charged by financial institutions that intermediate international remittances that largely fuel the country’s economic activity.
weak adoption
According to a report by the Salvadoran newspaper El Faro that cites data provided by the country’s own Central Bank, in April of this year, only 1.5% of total international remittances were received in Bitcoin through Chivo.
In addition, almost a year after the law came into force, a survey carried out in May showed that 71% of the population stated that they had not experienced effective economic benefits as a result of the adoption of Bitcoin as legal tender.
Part of the result can be attributed to the devaluation of BTC in the period, but the fact is that an article published in April by the National Bureau of Economic Research concluded that “despite the legal status of Bitcoin and the great incentives put in place by the government For its wide adoption, cryptocurrency is not a commonly accepted medium of exchange in El Salvador.”
Thus, according to Zablah, the adoption of Bitcoin as the country’s official currency has become a powerful propaganda tool aimed at seducing cryptocurrency enthusiasts around the world.
As evidence, cite the recurring statements by President Bukele about Bitcoin on Twitter, published mostly in English. If I had to speak to Salvadorans, I should do so in the Spanish used by the vast majority of the population. In fact, Bukele seeks the engagement of the international cryptocurrency community by co-opting some of them as informal “ambassadors” of the country, the article states:
“When some of the world’s leading cryptocurrency market players – such as Brock Pierce, founder of Tether, and Jack Mallers, CEO of Strike – come to El Salvador and praise Bukele in the media, they are acting as ambassadors of the References like yours fill the social networks and the world media related to cryptocurrency, bragging about how good Bitcoin is for El Salvador, how good it is to live here and how bold and daring Mr. Bukele is. as a leader.”
While these “ambassadors” promote the regime with posts like Stacy Herbert’s, saying that “mass emigration from El Salvador has stopped” following the adoption of Bitcoin, data from the United States Customs and Border Protection reveals that, on average, daily, 255 Salvadorans were apprehended trying to enter the country illegally. country in February 2022.
Unlike the paradise that bitcoiners paint on Twitter, the reality is different, says the journalist. In the past three months, the government has declared a state of emergency that has allowed nearly 40,000 people to be detained, often without formal charges.
Bukele has also begun to clamp down on press freedom, through a law that prohibits the reproduction of messages from gangs that informally control certain regions of the country. The government has also failed to investigate the illegal use of the “digital spy” Pegasus, used to monitor the electronic devices of journalists working in El Salvador.
Other examples of Bukele’s diversionary tactics using Bitcoin include revoking an agreement signed with the Organization of American States (OAS) to combat corruption in the country on the very eve of the Bitcoin Law announcement.
Bukele’s latest internal maneuver aims to allow him to stand for re-election in 2024, something that is unconstitutional under El Salvador’s law.
On the other hand, says Zablah, the Bitcoin Law also serves as propaganda for the cryptocurrency community, since the adoption of the cryptocurrency as legal tender in El Salvador in theory raises the status of BTC, helping to validate it with potential users. and even with other governments. After El Salvador, the Central African Republic became the second country in the world to make Bitcoin official as its official currency.
Paradox
The journalist concludes that it is time for the cryptocurrency community to reflect on the paradox of supporting the Bukele regime while defending the decentralized, unpermitted and uncensored nature of Bitcoin:
“The paradox between Bitcoin’s idealistic roots and its workings is nowhere more apparent in the world. Bitcoin grew out of the cypherpunk movement and the experiences of privacy advocates who were persecuted by the state. Its ethos must revolve around around libertarian ideas like distrusting the banks and the government, creating a grassroots movement that opposes the economic establishment, and avoiding censorship from autocratic authorities is pretty obvious to anyone visiting anywhere in El Salvador other than its beaches that Bukele is not building a techno-utopia; he is building a common authoritarian state under the guise of technology. Bitcoiners would do well to remember that when they cheer on Mr. Bukele, they are not inaugurating the technology of the future; they are validating a regime that violates human rights. of its citizens.”
The founder of Ethereum (ETH), Vitalik Buterin, was one of the few voices in the cryptocurrency community that disavowed the El Salvador experiment, stating that the adoption of Bitcoin could not be imposed as state policy.
As Cointelegraph recently reported, the cryptocurrency market crash throughout 2022 has caused the Bitcoin reserves accumulated by the Nayib Bukele government to depreciate by more than 50%.
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