Some traders smile with Bitcoin in El Zonte

A businessman made about $17,000 on his investment in property. This is an exception in El Salvador, where huge public spending seems systematically irrelevant.

By moises alvarado
March 20, 2024- 05:10

On El Zonte beach, 53-year-old trader Maria Aguirre says it was “pretty good” to invest $2,200 in buying bitcoin four years ago. Now, with the cryptocurrency surging, he has $19,000.

He sold them and with the profits, was able to buy washing machines, stoves, refrigerators, and furniture for the home and store. Those $2,200 were his extra savings, money he didn’t need. Two other traders interviewed by AFP say they have also benefited from their bitcoin savings.

Maria Aguirre serves a customer shopping in her “Mary’s Store”, the facade of which displays a small sign that reads: “Bitcoin accepted”, something that is now prohibited in El Salvador Not common in stores, as it is rarely used by the population there. Everyday transactions.

Read More: Bukele announces he will store 80% of Bitcoin in “vault” left Bitfinex wallet

The American magazine Science, one of the most prestigious magazines in the world in terms of scientific dissemination, partnered with social polling company CID-Gallup to learn about the use of Bitcoin in El Salvador.

And it published a study with compelling findings: despite all the government’s efforts and huge investments to promote it, this asset is unlikely to be adopted as a currency in this Central American country.

The specific beach where Maria Aguirre’s business is located has been nicknamed “Bitcoin Beach” because it is the first place in the country to welcome the use of cryptocurrencies for everyday payments.

But this is an exception in the popular beach country. A survey by the private Universidad CentroAmericana in January showed that 88% of Salvadorans did not want to use Bitcoin during 2023.

Another feature of Bitcoin staking in El Salvador is obscurity: there is no access to a single public document. Photo EDH/AFP

Now-on-vacation President Nayib Bukele introduced cryptocurrencies to bank a population largely excluded from the financial system, which did not happen.

In the Science study above, researchers concluded that Chivo or Bitcoin did not help bank the population that was underbanked. The highest number of people downloading the application were those who were already familiar with electronic payments.

This gambit didn’t work for remittances either: According to the Central Reserve Bank of India (BCR), in 2023, only 1% of $8,181 million in remittances came through digital wallets.

“People continue to use more traditional methods of sending (remittances) and people’s distrust of the volatility of cryptocurrencies has a lot to do with this. And the government has not found an accounting in that,” economist Cesar Villalona told AFP.

idle state investment

One of the most famous jokes from the American series “The Big Bang Theory” is about the movie “Indiana Jones and the Raiders of the Lost Ark”. In it, it is argued that the hero is irrelevant to the plot: the Nazis will find the ark and with it, he will die a gruesome death, whether Indiana Jones existed or not.

Something similar has happened with huge investments in Bitcoin in El Salvador. Maria Aguirre, a store owner in El Zonté, could have made her payment into one of the many Bitcoin wallets already on the market. To earn about $17,000, it was not necessary for Nayib Bukele to withdraw $200 million from a loan meant to support MSMEs affected by the pandemic.

Nayib Bukele Digital Asset Law
Bukele is considering a model of Bitcoin City. Photo EDH

Nor that the Chivo wallet was created (which cost $4.7 million in public funds) or that hundreds of ATMs were installed, for which the state pays $360,000 per month.

A solid training campaign would have been sufficient, in which Salvadorans learned how to invest in cryptocurrencies and manage the technology associated with its use.

Even direct government investment in Bitcoin, which hoards money that can be used to meet other needs, doesn’t make a difference.

American economist Aaron Sepulveda-Q says, “States managing Bitcoin, I don’t see anything justifiable… States cannot buy such long-term assets because society has current needs that would otherwise be neglected to save that money.” Is.”

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