The decision on the part of El Salvador president Nayib Bukele to make Bitcoin legal tender back in September 2021 may have been controversial to some people, both in that nation and the world at large. But in my opinion Bukele was correct to defend Bitcoin, especially during that time. He has recently gone on record as disputing the concept that El Salvador’s economy was left in ruins by the Bitcoin crash, and in November 2022 announced that his country would begin buying one Bitcoin a day.
Let’s look at some reasons why Bukele was right to defend Bitcoin in his country.
All about Timing
El Salvador was the first nation to take this step, though the Central African Republic has since followed suit. Bukele opted for the approval at a time when Bitcoin had come down a bit in price, but it was still a wise investment opportunity. While trends may be changing again right now, there is often a great deal of reward that accompanies risk.
This also helps increase El Salvador’s travel industry, which according to the Inter-American Development Bank (IDB) accounts for 17.9 percent of the nation’s exports and provides over 31,000 jobs. Also, the Lightning Network, a Layer 2 solution that enhances the functionality of the primary network, has proven to be beneficial to the nation’s retailers – notably those on Bitcoin Beach, a coastal area where the crypto has flourished, and which as a result has been targeted for infrastructure upgrades.
Global Reserve Currency Options
While El Salvador may not be in the running as the next global reserve currency provider, there is the possibility that Bitcoin could play a role in the world’s major currency options. The countries that are investing in this new opportunity may have a much more pronounced role than one might expect. Bukele invested $1.5 million more in Bitcoin this past summer – i.e., 80 bitcoins at the price of $19,000 apiece. That’s less than half the average price that the El Salvador government paid previously for its $105.6 million stake.
Paying Attention to the Needs of His People
Bukele’s decision to adopt Bitcoin as legal tender wasn’t something that was done to benefit just the wealthy of El Salvador. Rather, this was a calculated decision that took into account everyone in the country.
While some might be slow to reap the benefits, he believes it’s only a matter of time.
“Patience is the key,” he tweeted on June 18, 2022.
Certainly that is the strategy he is following. Certainly he will continue to wed himself to Bitcoin, even as others waver. Certainly he has hopes that other nations besides the CAR will follow El Salvador’s lead.
To that end El Salvador hosted a conference in June 2022 that included representatives from 44 other countries – places like Nigeria, Pakistan, Kenya and Paraguay. While others have yet to make the jump, the possibility exists that that will come to pass.
There are those who believe that such events will serve as a catalyst, that it’s only a matter of time before other nations take the leap.
In fact, Nayib Bukele is banking on it.
