IO Podcast | Episode 67
When El Salvador dollarized its economy in 2001, citizens took to the streets in protest. Unlike other countries in the region, the use of the US dollar was not common among the general population. While dollarization has brought long-term monetary stability, its full benefits have never materialized. In large part, this is due to the fact that successive administrations did not implement the reforms required for a successful transition.
According to Ishi, a pseudonymous Salvadoran bitcoin developer and founder of Torogoz.dev, the announcement of bitcoin as legal tender in 2021 followed a similar pattern. Salvadoran President Nayib Bukele made the decision overnight, without public consultation.
Today, bitcoin—which has lacked grassroots adoption since the beginning of Bukele’s policy—remains extremely unutilized in El Salvador. In fact, “Less than 1 percent of remittance recipients reportedly use bitcoin for transnational transfers.”
Despite the shortcomings, Ishi identifies three clear benefits of bitcoin for El Salvador: (1) it boosted the country’s global recognition and branding; (2) it attracted a significant increase in tourism; and (3) it enabled the creation of a monetary reserve not backed by the US dollar.
Ishi also notes that recent negotiations with the IMF have resulted in bitcoin no longer being a mandatory currency. This shift may pave the way for a more organic and beneficial adoption by those who genuinely want to use and accumulate bitcoin in El Salvador.
Recommended Links
- Follow Ishi on X.
- “How Nayib Bukele Turns Repression into Revenues,” Impunity Observer.
- “How Nayib Bukele Played the IMF with Bitcoin Bargaining Chip,” Impunity Observer.
- “Why Salvadorans Reject Bitcoin,” Impunity Observer.
