There are those who believe that the cryptocurrency could be useful to not depend only on the dollar.
Other analysts point out that bitcoin will suffer if the country ends in an economic collapse.
Peruvian journalist Juan José del Castillo maintains that the real reason for El Salvador to decide to adopt bitcoin as legal currency is an imminent financial blockade and other sanctions by the United States. Although for him it is an effective solution, analyst Vlad Costea stands on the opposite shore and says that it is an experiment “that is going to end badly.”
In a report published on his YouTube channel Prensa Alternativa – El Jota del Castillo explains that “in the last 35 days, the situation in El Salvador has changed drastically. First, Bukele questioned the legal system and that ended with the outrage of the Supreme Court magistrates and the Attorney General.
According to the BBC, the argument for making this decision was that the judges would have taken measures contrary to the provisions of the Executive during the Covid-19 pandemic, which would have generated problems for the Ministry of Health. Furthermore, in certain cases alleged links with opposition politicians are questioned.
The Supreme Court of Justice described as “unconstitutional” the measure taken by the Assembly (with a majority of Bukele’s party, New Ideas). However, this allowed the president to also take over the third power of the nation legally, at least for the moment, say sources quoted by the same medium.
“Many Salvadorans perceived this as an act of corruption,” says the journalist, who adds that this fact was also a break with the American establishment, “That he has felt comfortable under the protection of this judicial power.”
However, Castillo maintains that “instead of sitting still, Bukele has forged very strong ties with China. For the United States, that was the red line: they began to accuse him of being a dictator, and the next step is economic sanctions and blockades.
In 2020, President Bukele broke into Parliament with the military. Source: EuroNews
“These measures could be very effective for a small nation whose legal tender is the dollar. A dead end. Not even Venezuela, with its economic resources, has been able to counteract these blockades, ”he continues in his argument.
Now, with this introduction raised, del Castillo makes it clear that he considers the adoption of bitcoin by El Salvador a good measure, which was announced at the Bitcoin Conference 2021, as reported by CriptoNoticias. «Bukele is showing his wide view of the moment in which we move. Who will be able to block bitcoins? How do you go about banning people from sending bitcoin to El Salvador? There is no way to prevent it, ”he said.
This point is of vital importance, since 21% of El Salvador’s GDP depends on remittances sent from abroad, according to the Economic Commission for Latin America and the Caribbean. Thus, in the event of a blockage in sending dollars, the economy would be practically paralyzed. However, the problem could be avoided with the use of applications such as Mallers, which allows you to send dollars through the Lightning Network using bitcoin as a highway. In this way, there would be no possible censorship.
With this, “El Salvador is not going to be invulnerable, but it has a great exit door from where it can project its expenses and purchases without going through the ring of Wall Street banks,” the journalist closed.
For some, the bitcoin experiment in El Salvador “will not end well”
Contrary to del Castillo, analyst Vlad Costea of Bitcoin Takeover maintains that this move will not yield good results for either party, for various reasons. First, points out that El Salvador’s debt-to-GDP ratio is 90.17%, the highest in history for that country.
On the other hand, “in El Salvador there are reports of bad practices by the president. On May 21, 2021, (Chilean lawyer) José Miguel Vivanco wrote an article for Human Rights Watch in which he points out Bukele’s tendency to replace judges and intervene in the courts ”.
Likewise, adds Costea, “Amnesty International and Freedom House have presented negative reports on the political use of public force, police brutality, abuses against activists and journalists, and coercion of individual freedoms and rights. Added to this is the lack of political stability in the country in the 20th century.
It is precisely this lack of stability that, according to the podcaster of Bitcoin Takeover, could make bitcoin end up being “a one-term experiment” that is later wiped off the map by the next president.
In this sense, he affirms, the adoption of cryptocurrency “will affect El Salvador’s international relations, and it does not constitute a solution for its inhabitants either. Bitcoin is supposed to be a people’s currency, and not regulated by a government, which could lead to it being crushed by higher military and financial powers.
Of course, the Castillo and Costea agree on something: It is very likely that in the future there will be new embargoes and blockades to El Salvador. “That would lead to the closure of bank accounts, difficulty in accessing cash and, worse still, to great problems for the payment of the nation’s foreign debt,” says the second.
In case the experiment goes wrong (as Costea believes it will inevitably happen), media coverage of how bitcoin bankrupted an entire country would be very damaging for cryptocurrency, argues the analyst. “In the end, it seems that instead of laying the foundations for the adoption of bitcoin, we are seeking approval from the government and corporations,” he concluded.