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Why El Salvador Is Botching Its Bitcoin Experiment

1 15 0
24.09.2021

Michael J. Casey

It’s rare that I agree with David Gerard, the British writer who has made a career out of cherry-picking the crypto industry’s problems to savage those of us who argue in good-faith for crypto’s long-term potential.

But I find myself agreeing with many of his recent assertions about a badly handled rollout in El Salvador of Bukele’s bitcoin project, with its bug-riddled Chivo wallet. I wouldn’t call the experiment a “farce,” per the headline for Gerard’s Foreign Policy piece, but it’s hard to disagree with his point that “if Bukele wanted Salvadorans to hate everything about bitcoin...Chivo has been a worked example of how to get there.”

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It’s an unfortunate coincidence that bitcoin has dropped almost 25% since the government first purchased 400 bitcoins on Sept. 6, when its controversial bitcoin legal tender law went into effect. More importantly, the combination of that price drop with Chivo’s continued glitches, with concerns about some of the law’s more draconian elements and with harsh treatment of one of its critics, has fueled a mini “bank run” on the bitcoin that was distributed to Salvadorans. (Each person who submitted their national ID to sign up for a wallet was to receive $30 worth of bitcoin, a value that has since significantly declined.) This will leave a bad taste in the mouth of many Salvadorans.

Unlike Gerard, who would undermine his brand if he ever delivered a positive message about cryptocurrency, I think an opportunity remains for the government and thoughtful crypto industry leaders to turn this around. El Salvador’s experiment can still evolve into a lasting source of empowerment for that country’s impoverished masses.

But it’s going to take a different mindset. We must proactively demonstrate to Salvadorans that bitcoin is part of a decentralizing strategy of local empowerment that allows them to participate in new business and energy development models

Over time, bitcoin can bolster the Central........

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