As governments in the region closely watch El Salvador’s experiment, and a second nation, the Central African Republic, follows suit with Bitcoin adoption, Bukele’s difficulties suggest that efforts to transition entire nations to cryptocurrencies are fraught with pitfalls.
“Nothing positive has happened,” said Ezequiel Milla, former mayor of La Union, speaking near the base of a volcano on the country’s east coast that Bukele plans to use for geothermal-powered Bitcoin mining.
The murder spike is just one of many problems interfering with the country’s Bitcoin initiative, according to more than three-dozen interviews – conducted in both English and Spanish – with local officials, opposition leaders, entrepreneurs, Bitcoin activists and regular Salvadorans across the country.
Many Salvadorans remain wary of the digital currency after a rollout marred by technical glitches and identity theft. Despite a mandate that Bitcoin be treated as a legal tender, recent research indicates that most businesses do not accept it, and those that do report that consumers rarely choose to pay with it.
In the East, where Bukele has vowed to build a futuristic Bitcoin City to jumpstart development, residents are still waiting for more basic economic infrastructure that the president promised years ago.
Meanwhile, plans to begin offering a first-of-its-kind sovereign “volcano bond” – to be backed by the Bitcoin mined with geothermal power – have been delayed, with some financial analysts panning the proposed terms as a bad investment.
Even many of the most enthusiastic supporters of Bitcoin in El Salvador complain that the recent flawed rollout has backfired by causing Salvadorans to sour on a technology they might otherwise embrace.
Domestic critics, meanwhile, contend that the adoption of Bitcoin achieved the opposite of economic empowerment by allowing Bukele to centralize power and undermine transparency.
“The Bitcoin philosophy is about freedom, but in El Salvador the Bitcoin experiment is part of an authoritarian project, and that’s incoherent,” said Claudia Ortiz, an opposition lawmaker and potential 2024 presidential candidate.
The experiment has not failed: The fanfare has attracted a steady stream of tourists and attention from foreign investors. Some Salvadorans have embraced the initiative, and advocates say that despite early setbacks, interest among citizens is slowly growing. If Bitcoin’s price sees one of the dramatic rallies for which the volatile asset has become known, enthusiasm for the project could suddenly surge.
But eight months in, the project has notched more disappointments than victories.
It was at the Bitcoin 2021 conference, last June in Miami, that Bukele announced by video that El Salvador would become the first country in the world to make Bitcoin legal tender, citing its potential to lower the costs of remittances and expand financial access to his country mostly unbanked population.
He couched the decision in lofty terms. “We as humanity can do almost anything that we imagine. Our ingenuity [is] what separates us from other species. In El Salvador we are trying to rescue this idea and start the design of a country for the future, using the best… ideas from history and around the world, ”he said. “I believe Bitcoin could be one of these ideas.”
The news prompted a raucous standing ovation from the crypto faithful. At a time when Bukele faced harsh scrutiny for a power grab in which his party had removed several justices from the Supreme Court the month prior, it also changed the focus of international coverage of his presidency.
Four days later, the country’s legislative assembly, where Bukele’s New Ideas party controls a supermajority of votes, passed a law adopting the new currency with little debate.
In September, the government rolled out the new currency, offering each citizen $ 30 worth of free Bitcoin if it downloaded the latest digital wallet app, called Chivo, which is slang for “cool.”