Bukele's Bitcoin predictions have largely missed the mark so far
Nayib Bukele is an unapologetic proponent of Bitcoin, who has made the crypto-currency legal tender in El Salvador, proposes to build a tax haven city named for Bitcoin, and has invested more than $85 million of the country's tax dollars in Bitcoin purchases. He promotes Bitcoin in English from his Twitter account, predicting a rosy crypto-future for El Salvador. Today we look at how some of Bukele's predictions are faring.
There is an issue, however: Outside of the beach towns filled with crypto-curious foreigners, no one wants to use it.
El Salvador's bitcoin experiment makes tech tourists happy but the locals are not convinced -- Australian Broadcasting Co.
While most citizens in El Salvador have a cell phone with internet, less than 60% of them downloaded Chivo Wallet, and 20% continued to use the app after spending their $30 sign-up bonus. Further, 5% of citizens have paid taxes with bitcoin, and despite its legal tender status, only 20% of businesses —mostly large ones—accept bitcoin and 11.4% report having positive sales in bitcoin. In the first quarter of 2022, we find almost no new adopters and the share of remittances in bitcoin is at its lowest point since Chivo Wallet’s launch.
One of the major drivers for the use of Bitcoin and the Chivo wallet was supposed to be a reduction in the cost of family remittances through money transfers sent from abroad. However, in January and February this year, a scant 1.7% of remittances were sent using digital wallets according to data from El Salvador's Central Reserve Bank.
A reporter from Bloomberg tried out El Salvador's Bitcoin economy and wrote about the experience in The Infuriating Reality of Traveling with Bitcoin in the World's Crypto Capital:
The final tally looks grim for crypto fans. Only 10 of almost 50 businesses had taken Bitcoin, amounting to $485 out of $1,700 I’ve spent. And only four crypto transactions—at the pool hall, the peanut vendor, a Starbucks, and a Caterpillar-brand T-shirt store—had been entirely seamless. My experience isn’t a fluke. In a recent Chamber of Commerce survey of 337 businesses, only 14% said they’d transacted in Bitcoin since September.
So far, Bitcoin shows no sign of creating a "real revolution" in El Salvador's cash economy.
No profits, only losses, from Bitcoin investments so far
Bukele told the Salvadoran public that a pet hospital -- Chivo Pets -- was being built with "profits" from the country's purchases of Bitcoin. In the following tweets from October 2021, he clarified that El Salvador was actually not selling Bitcoin and realizing its profits, but was using US dollars from the trust which is supposed to back up the Chivo wallet app and the free conversion between dollars and Bitcoin.
Note that if Bukele were doing what he indicated in his October 2021 tweets above, he should be putting $17 million back into the trust to make its current value the same as when the Salvadoran government established it with taxpayer money, and should restore the dollars withdrawn from the trust for construction of the Chivo Pets hospital. There is no indication that this is happening (but the government also provides no public accounting of the flow of money into and out of that trust).
Other Predictions unfulfilled.
Bukele had some other predictions on New Year's Day 2022:
On Nayib Bukele's Twitter — followed by 3.8 million people — Bitcoin memes and laser eyes have been replaced by photographs of handcuffed gang members.
Others are noting the contradictions of a president who promotes a libertarian version of freedom embodied in Bitcoin and crypto-currency, while at the same time engaging in an authoritarian crackdown on his critics.
Some call him the visionary leader Central America needs. Others consider him a thug who violates human rights at every turn. Either way, he’s just getting started, and wait till you see the crypto mining operation he plans to power with a volcano.
Bukele: The Bitcoin Strongman of El Salvador -- Mel Magazine
Yet despite this record of predictions which are far from coming true, the crowd of Bitcoin enthusiasts who believe in Bukele's vision, continue to head towards the empty corner of El Salvador where Bitcoin City might be built:
If built, Bitcoin City would qualify as the perfect utopia for crypto adopters, who are big on creating crypto-friendly jurisdictions with flexible regulation, little government oversight, and minimal taxes....[W]ealthy investors from Europe and El Salvador have already started making offers to locals in areas surrounding Conchagua.
Report: Crypto millionaires flock to El Salvador to invest in the Bitcoin City project -- CryptoSlate