What is really behind El Salvador’s ‘Bitcoin Law’? Experts answer

Max Yakubowski
JUL 02, 2021
What is really behind El Salvador’s ‘Bitcoin Law’? Experts answer

Cointelegraph

1.

Introduction

Last month, Salvadoran President Nayib Bukele’s “Bitcoin Law” was passed by El Salvador’s Legislative Assembly, giving the world’s first cryptocurrency the status of legal tender — something that is indeed a historic milestone for Bitcoin (BTC). The news was appreciated by the crypto community, and the flagship cryptocurrency surged 11.98% to $37,573 after the announcement.

President Bukele chose the perfect time and place to announce it: during the Bitcoin 2021 conference in Miami. It’s hard to imagine a more grateful audience of crypto supporters and advocates to be the audience for such an announcement. As Marc Powers, a law professor and former United States Securities and Exchange Commission attorney, described it in his latest opinion article: “The showstopper was [...] the young president of the Republic of El Salvador, Nayib Bukele, who hails from the most densely populated country in Central America. [...] At the conference, Bukele announced that the country would adopt Bitcoin as a second native fiat currency, on par with the U.S. dollar.” And here’s how President Bukele described his intentions: 

“In the short term this will generate jobs and help provide financial inclusion to thousands outside the formal economy.”

And while some argue that the Salvadoran experiment might be a bottleneck for Bitcoin, this law could be a solution to provide financial services to the nation’s people, considering about 70% of the population is unbanked. Meanwhile, the new law in El Salvador is about to forcibly onboard everyone, as it states:

“Every economic agent must accept bitcoin as payment when offered to him by whoever acquires a good or service.”

The important question is: Will the mandatory transfer to crypto work? It has been said many times already that mass adoption of cryptocurrency is possible, but only through educating people so that they can gain a better understanding of crypto. Will President Bukele educate people on how to use crypto? Additionally, one-third of the population in El Salvador lacks access to the internet, which would make it impossible for them to access Bitcoin and crypto services. How is President Bukele going to solve this problem in order to “provide financial inclusion” as he promised? 

Also — and crucially important — a transition toward crypto should be a free-will choice made by the people themselves and not a forced decision made by a president. That notion is a core value of all cryptocurrencies — an aspect of their decentralized nature. But the highly centralized nature of President Bukele’s actions seems quite logical, given that he has been said to be on a path toward becoming “Latin America’s first millennial dictator.” In a country that is accused of having some serious problems with human rights — with Human Rights Watch