‘It gave us branding, investment, and tourism’

El Salvador President Nayib Bukele has defended his country’s groundbreaking decision to adopt Bitcoin as legal tender, highlighting the impact it will have on the country’s global image and economic opportunities.

In a recent interview with Time Magazine, Bukele highlighted the benefits that Bitcoin (BTC) has brought to El Salvador despite widespread skepticism and limited local adoption.

Bukele said Bitcoin doesn’t just “brand us,” but that embracing the digital economy boosts tourism and encourages investment. The interview comes three years after El Salvador became the first country in the world to officially adopt Bitcoin.

Bukele, who was featured on the cover of Time Magazine as the “coolest dictator in the world,” has become a polarizing figure in global politics. Although less than 12% of Salvadorans have made a single Bitcoin transaction, according to Time, the president has emphasized that his primary goal is to reposition El Salvador on the global stage.

According to the latest news, there are 5,851 BTC in the country, worth approximately $352,300,000 at the time of writing.

El Salvador and Bitcoin

El Salvador made global headlines in September 2021 when it became the first country to adopt Bitcoin as legal tender. The move, led by Bukele, was aimed at increasing financial inclusion in a country where 70% of the population lacks access to traditional banking services.

The government introduced an official crypto app, Chivo Wallet, that offered citizens $30 worth of free Bitcoin as an incentive to download and use the app. Despite these efforts, widespread adoption was limited, and many early adopters did not engage in subsequent transactions after spending the initial bonus.

El Salvador’s rationale behind adopting Bitcoin was multifaceted. One of the primary motivations was to provide financial services to the unbanked population and reduce remittance costs, which are vital to the Salvadoran economy.

Bitcoin also aims to facilitate faster and cheaper transactions, particularly via the Lightning Network, which is vital in a country where traditional banking infrastructure is often inaccessible. However, the policy has faced significant challenges, including technical issues with the Chivo Wallet and skepticism from the general population.

Bukele’s critics

Critics of El Salvador’s adoption of Bitcoin, including major financial institutions such as the World Bank and the International Monetary Fund, have expressed concerns about the risks associated with Bitcoin’s volatility and its potential impact on financial stability.

Despite these warnings, President Bukele remained committed to the Bitcoin experiment, viewing it as a bold step toward economic innovation and financial independence.

Bukele has been unapologetic about it, seeing Bitcoin as a key element of his broader strategy to attract foreign capital and boost tourism.

In a way, that logic worked. Lobbyist Damian Merlo told Time magazine that the Bitcoin tourism gamble was working.

“We call it the Great Rebranding. It was a genius idea… We could have paid a PR firm millions of dollars to rebrand El Salvador. Instead, we just adopted Bitcoin.”

Damian Merlo.