The people don't want it, but that won't stop the currency's cheerleaders
It was the morning of September 7th, 2021, when El Salvadorian President, Nayib Bukele, was about to officially enact Article 7: a law declaring Bitcoin as legal tender that he seemingly cooked up in a hurry, only a few months prior.
In the run-up to its passing, Bitcoin’s biggest promoters worldwide hyped up the event as a revolutionary moment for El Salvador, one that could liberate its citizens from the clutches of the U.S. empire, and its supposed unofficial puppet, the World Bank.
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This Bitcoin elite, however, has seemed to discount President Bukele’s questionable past. As journalist Manuel Melendez-Sanchez writes: “[He] has used state agencies to harass journalists, investigate opposition parties, and undermine government oversight.”
Weirdly enough, that might be because they have either met up with Bukele in El Salvador or cheered on his policy via video link at the “Bitcoin 2021” Miami conference. Despite his authoritarian streak — antithetical to the purported egalitarianism of the crypto world — somehow this didn’t matter to Bitcoin’s main publicists.
Instead, the pre-law price pump was the goal. All the highest-profile bulls, like Lark Davis and Peter McCormack, showed their support for Bukele’s historic Bitcoin law. Moreso, the cryptocurrency’s main evangelist and Microstrategy CEO, Michael Saylor, couldn’t resist one last promo, urging people to buy $30 of Bitcoin before the law passed.
Soon after Bitcoin’s “watershed moment” came to fruition, however, it delivered a cascade of calamitous events. Within hours, the Bloomberg Galaxy Crypto Index plunged over 10%, the Bukele-backed Chivo Wallet went offline for maintenance, and all the celebrities who’d recently promoted crypto fell into the shadows, realising they might have egged their fanbase into buying the top.
Then, in a strange twist, Bukele appeared on Twitter. Engaging in the popular investing adage of “buying the dip”, he announced an additional purchase of 150 Bitcoins.
Meanwhile in the real world, enraged by the Bitcoin law, El Salvadorians, took to the streets in protest. Those who had bought into Bukele’s vision experienced Bitcoin’s volatility first hand, watching its price — and their Bitcoin holdings —plunge double-digit percentage points in seconds.
After all this turmoil, we should ask who Bitcoin is really helping: ordinary El Salvadorians or the country’s elite? And just as importantly, we have to question the Bitcoin movement’s legitimacy, impact, and endgame, especially when its top advocates endorse an autocrat, hell-bent on imposing an asset that most citizens don’t want.
Minus a few prominent Bitcoiners, we saw the Bitcoin community remain silent when any “FUD” countered their narrative, even if that meant harm to the people of El Salvador. Because it’s they who must face the consequences of Bitcoin’s major advocates supporting a fiercely volatile, unorthodox currency becoming part of El Salvador’s official reserves.
But if anything good comes out of this fiasco, it’s that El Salvador will not have to deal with the World Bank to achieve Bukele’s Bitcoin vision. Citing “environmental and transparency shortcomings”, the “international financial institution”, with its history of poking its beak into other countries’ affairs, has not supported El Salvador’s Bitcoin venture.
Still, this will leave every El Salvadorian citizen wondering what’s more of a danger to the monetary future of their country: a shadowy global organisation not offering its blessing, or that their money supply is about to be governed by a dip-buying dictator.
Greg Barker is an independent journalist and quant, who also writes under the name Concoda. You can find him on Substack and Twitter at @concodanomics.