Today was a special day for the El Salvador 2021 Mission of the Bitcoin Italia Podcast. In fact, we celebrate Laura’s birthday and we want to do it in style. As she deserves.
For the occasion, many friends we have met in recent days are converging on the beaches from the capital of the country. What a united collectivity that is the Bitcoin community. This passion that unites us, the belief that we are changing the world for the better, really makes us a big family. So much so that people we met just a few days ago, feel the need to see us again and be with us on such an important day. What can I say, heartwarming.
It is of course an opportunity to meet up in the afternoon in one of the many bars facing the main beach of El Zonte, Olas Permanentes, and start chatting again, exchanging opinions and telling each other our impressions of what is happening in El Salvador. We, too, have been here for about ten days now, and slowly, piece by piece, the puzzle is taking shape in our minds. We can join in the many talks to try to offer our point of view.
The conversation very soon becomes political and focuses on the delicate international relations between the countries of this geographical area and the rest of the world. In fact, it is undeniable that the adoption of Bitcoin as legal tender wanted by President Bukele has had direct consequences not only among the population, in the streets, but also at an institutional level. Although, it is always good to remember, Bitcoin cares very little about all of this, it was created to be above nations, politicians and any kind of establishment, it is equally undeniable that initiatives like the one in El Salvador can play an important role in its adoption and contribute to the credibility of the technology by offering real use cases.
The “Ley Bitcoin” therefore introduced two different levels of comparison. The first is related to the real economy. In the coming months, the Salvadoran people will have to be properly educated and understand that Bitcoin can contribute to their economic well-being and that of the country. It will have to become the preferred value transmission tool for all the millions of unbanked – about 70% of the population – who live here and gain credibility among the people as a useful store of value.
However, the second level of confrontation is perhaps just as important and is that of being an opportunity for redemption for nations which, like El Salvador, have been underdeveloped for decades, have dollarized economies and are enslaved to injections of liquidity from foreign capital. This is the fundamental game. And it is here that Bukele’s gamble is on the line.
And how is the institutional world reacting to Bitcoin as a legal tender?
For the moment, the reactions are of mockery. They range from the derision of other political leaders to the harsh criticism of the various international finance ministers. The Salvadoran President is seen as a dumb kid who is talking big and has no idea what he is doing. Bitcoin as a propaganda move that has no use and can do nothing to improve the fortunes of a country. All more than legitimate opinions, let’s be clear. This is a unique, unprecedented experiment and no one really knows how it will end. So every opinion is really justified because there is no data to support either one or the other thesis. This however is a transitional phase. Momentary. Data are coming and this could change everything.
In fact, our direct impression being here is that capital is coming. There are many tourists we met who after only three months are coming to El Salvador to see what is happening here with Bitcoin, and there are many entrepreneurs we met who are investing in the country. Those who want to buy land to build a citadel, those who want to open a branch of their tech company, those who want to live here and continue their work from the sunny beaches of El Zonte. These are concrete numbers that add to the country’s economy.
No one knows how the Bitcoin Bond launched a few weeks ago will go. But according to Samson Mow of Blockstream, who worked directly on its creation, already 30% of the bonds would have sold out, in pre-sale, when there is still not even an official issue date.
How much can all this turmoil concretely impact El Salvador’s economy?
According to some of the managers at our table, executives of large hi tech companies as already reported, so with their rather reliable sources, there would be unofficial data that see for 2021 a GDP growth of around 9%. And the bulk of this figure, already out of the ordinary, would be attributed to the direct and indirect induced by the Ley Bitcoin.
El Salvador will go to new elections in 2024 and that is the goal of President Bukele. The date for which he intends to bring his citizens incontrovertible data. What if in the next two years, thanks to Bitcoin, El Salvador were to record a 20% increase in domestic product? Who would still be laughing?
Certainly not the other countries of Central America that live a very special relationship between them, of intimate connection and brotherhood. This is a geographically small part of the continent and the citizens of the various nations are culturally very similar and consider themselves directly related. Everyone in Central America knows what goes on and how life is lived in each nation in the region. They are only a few hours drive from each other.
If El Salvador in late 2022 were to start showing the world signs of record growth, unprecedented in this part of the earth, how would its brothers Nicaragua, Honduras, Guatemala and Costa Rica react?
The feeling is that history is really being made here. El Salvador could concretely be, within a few years, the first domino to fall, the fuse that starts the fire. If the madness of a young president should turn out to be the winning idea for the redemption of a long oppressed people, the earthquake that could ensue would be a technological and economic revolution that, starting from the nations of Central America, would risk infecting the entire world, removing from the mouths of the many poppies in Bentley the mocking smile that today they confidently flaunt.