El Salvador positioned itself strongly on Saturday in the world of cryptocurrencies after its president, Nayib Bukele, announced in the middle of the Bitcoin Conference 2021 his intention to make Bitcoin a legal tender within his nation. Beyond the euphoria it has generated in the ecosystem, it is pertinent to evaluate the possible motivations behind the measure.
The young Salvadoran president has always been a controversial or striking president. Either because of his young age, his interviews with youtubers or his disputed measures against other political powers in El Salvador, Bukele has known how to stand out in the world political field.
Bitcoin El Salvador
Now, in the midst of the Bitcoin and cryptocurrency boom and its dizzying growth, where support from banks, institutions, influencers and actors has been seen, the president it has made a hole to also become a reference in this vast world of cryptocurrencies.
The economic benefit of supporting Bitcoin
As an entrepreneur (and son of entrepreneurs), Bukele has demonstrated throughout his political career that he has business acumen. Despite El Salvador’s small financial impact on the world economy, the hierarch has promoted agreements and projects that promote sectors such as tourism and sports within the Central American nation.
In the case of Bitcoin, it seems that Bukele’s business acumen has not been left behind. Although he mentioned in his official presentation that the adoption of Bitcoin as legal tender came after seeing the irresponsible action of the world’s central banks, in the following days he has been able to demonstrate through his personal Twitter account that there is also a financial motivation behind all this.
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Making a comparison with the market capitalization of Bitcoin, which at the time of the publication of Bukele’s tweet was at 680 billion dollars, the president expressed that If only the equivalent of 1% of that amount was invested, Salvadoran GDP would have an increase of 25%.
Although Bitcoin is certainly not “a company” that has those billions of dollars to invest in any particular sector, it is true that it has an industry behind it that can provide investments and dividends for the Salvadoran economy.
Following Bukele’s announcement about Bitcoin, the president himself also clarified in a conversation with Justin Sun, CEO of the Tron Foundation, that They would be carrying out a series of prerogatives to boost the crypto industry, among which they stand out that there will be no capital gains taxes for Bitcoin and that they will facilitate immediate permanent residences for entrepreneurs in the crypto industry.
Justin Sun’s Secret
Given these measures and the support expressed, various companies did not wait to demonstrate their intention to invest in El Salvador. Justin Sun himself stated that Tron would have an office in El Salvador, while Blockstream, one of the largest Bitcoin development companies in the world, He indicated that they would be working on a satellite infrastructure plan to help Salvadorans in rural areas connect to the internet and use BTC. Others like Zac Cheah, CEO of PundiX Labs, stated that would be donating 100 XPOS to Salvadoran merchants to “facilitate” the adoption of Bitcoin.
Likewise, beyond concrete actions, El Salvador has been in the conversations of important industry figures such as Changpeng Zhao, Binance CEO, Tyler Winklevoss, Gemini co-founder, Caitlin Long, Avanti Bank CEO, and Anthony Pompliano, investor and recognized industry influencer.
The political hand behind it all
Despite the euphoria surrounding this announcement, there are those who are looking to look beyond the economy and the positives, detailing that Bukele’s measures may not be so positive after all.
One of these critics has been Vlad Costea, who with his publication “Why Adopting Bitcoin Is A Bad Idea For El Salvador”, translated into Spanish as “Why is the adoption of Bitcoin a bad idea for El Salvador?” argued a series of negative elements in the situation.
Although not all these reasons will be mentioned in this article, there is one that could be used to delve into the possible political reasons that could be driving this movement of the Salvadoran president.
Bitcoin vs dollar
Promptly, Costea details that the official currency within the economy of El Salvador is the US dollar. Faced with this situation, he expresses that obviously the United States will not be in favor of the “Bitcoin standard” and the diminishing power of the dollar in Salvadoran society, which could lead it to execute “commercial restrictions and even large-scale embargoes in which El Salvador’s neighbors will agree to participate”, according to textual words.
Although it may seem like a crazy act, and it could even be seen as a disproportionate reaction on the part of the United States authorities, Bukele’s relations with Washington invite one to believe in the possibility that they will happen.
Cryptocurrency regulation United States
Despite having arrived with the blessing of White House politicians, Bukele’s latest actions have distanced him from the American go-ahead. Specifically, the Americans saw the dismissal of five constitutional magistrates and the Attorney General of the Republic of El Salvador by the Legislative Assembly, which is in the power of Bukele’s party, as an authoritarian action by the president.
Beyond the rejections, Bukele’s measures have led the US government to decide to withdraw the monetary support it maintains with various Salvadoran public institutions to hand it over to various NGOs.
For his part, in what appears to be a movement reminiscent of the best years of the Cold War, El Salvador has responded to the rejection of the United States by strengthening ties with China and Russia.
Biden and crypto
Financial agreements and political rapprochements with the biggest geopolitical rivals of the United States, measures that could be risky for Bukele, especially if it is considered that the latter is the nation that issues the legal tender of its economy.
However, beyond the risk that may arise from upsetting the United States, The adoption of cryptocurrencies as an alternative to (possible) sanctions or blockades is not really unreasonable and there are already case studies that El Salvador could detail. Within the continent itself you can see the scenario of Venezuela, as well as the case of Iran in the Middle East.
What do Salvadorans think?
To learn a little more about the local vision that is maintained in this regard, BeInCrypto contacted César Medrano, Expert in Digital Transformation and Corporate Innovation and member of the crypto community of El Salvador, who expressed that from his user perspective, a key factor that seems to motivate his action is “his age and the way of conceiving traditional problems.”
Thanks to these factors, the Digital Transformation expert mentioned that This allows it to “bet on innovation as a viable instrument to find solutions”, in addition, he added that This helps him not to perceive technology as a threat and what allows him to see Bitcoin as a tangible path towards financial inclusion, especially considering that 70% of Salvadorans do not have access to banking., as Medrano recalled.
Regarding the perspective of the average Salvadoran towards Bitcoin, he told the media that the ease offered by this technology to carry out transactions makes it very intuitive to “fit into the daily life of any Salvadoran”, recalling what has been the use case that has been seen in Playa El Zonte or Bitcoin Beach, where the adoption of Bitcoin and cryptocurrencies has been seen for almost two years.
Given all this, Medrano concluded that hopes to see El Salvador as the “first success story in adoption and a benchmark for crypto development in the world.”
The post What prompted Nayib Bukele towards Bitcoin, a political or economic motivation? was first seen on BeInCrypto.