We use cookies to provide some features and experiences in QOSHE

More information  .  Close
Aa Aa Aa
- A +

El Salvador Is Printing Money With Bitcoin

2 8 0
15.06.2021

Nayib Bukele, the president of El Salvador, is young, dynamic, and impulsive. In a video played at the Bitcoin Miami conference in Florida on June 5, Bukele announced a major economic policy change: El Salvador would be adopting bitcoin as an official currency, running in parallel with the U.S. dollar, the country’s currency since 2001.

This is likely to be a disaster for the country—but it’s typical of Bukele’s erratic style of government. It’s also typical of Bitcoin fantasies; a project completely unsuited to daily life in El Salvador, set up largely to boost the image of the cryptocurrency itself.

Nayib Bukele, the president of El Salvador, is young, dynamic, and impulsive. In a video played at the Bitcoin Miami conference in Florida on June 5, Bukele announced a major economic policy change: El Salvador would be adopting bitcoin as an official currency, running in parallel with the U.S. dollar, the country’s currency since 2001.

This is likely to be a disaster for the country—but it’s typical of Bukele’s erratic style of government. It’s also typical of Bitcoin fantasies; a project completely unsuited to daily life in El Salvador, set up largely to boost the image of the cryptocurrency itself.

Bitcoin is the first cryptocurrency, originally created to be a form of money outside government control. Bitcoin has utterly failed to be useful as currency—except for ransomware payments—so the promotional line is now that it’s a “store of value.” That is quite a claim for a speculative commodity given to spectacular asset bubbles, whose price can go up and down 50 percent within a couple of months.

The Bitcoin Law passed 62–19, with three abstentions, just after midnight local time, early June 9. Nobody had seen the law except the president and perhaps the minister of the economy, Maria Luisa Hayem, before it was proposed at 8pm on June 8; Parliament discussed it for a few hours, and it was rammed through with Bukele’s massive parliamentary majority.

Bitcoin will be legal tender for all debts, including tax. Merchants must accept bitcoin for goods and services, unless they are technologically unable to. (In practice, that’s a loophole large enough to drive a truck through; bitcoin is functionally useless as a payments system.) Accounts will still be kept in U.S. dollars; bitcoin is just a........

© Foreign Policy


Get it on Google Play