Election Season in El Salvador: Institutional Support for Bitcoin Grows
As President Nayib Bukele’s re-election date approaches, Bitcoin is gaining increasing institutional support in El Salvador, laying a strong foundation for the country’s experiment with Bitcoin as legal tender.
Election season is ramping up in the Republic of El Salvador, with the presidential vote set for February 4, 2024. President Bukele’s overwhelming lead in the polls has been a consistent trend, although questions about his eligibility for re-election have persisted. However, the courts have officially validated his candidacy, setting him on track for a second term.
Bukele’s decision to make Bitcoin a legal currency in El Salvador in September 2021 has garnered international attention. The move was motivated in part by the country’s previous reliance solely on the US dollar, which put El Salvador at a disadvantage in economic matters. The introduction of Bitcoin has opened up new opportunities, particularly in international remittances, where traditional financial middlemen like Western Union can be bypassed.
Despite initial opposition to the experiment, El Salvador’s new economic model is gaining acceptance, as evidenced by the S&P’s upgrade of the nation’s credit rating in November. Bitcoin has also led to a significant increase in tourism, with visitors from the US doubling since Bukele took office. The government credits Bitcoin as the “driving force” behind the country’s “rebirth”.
However, while Bitcoin’s role in the country’s economic development looks promising, the population has been hesitant to adopt it on a mass scale. Bukele’s popularity as a crimefighter could lead to a gradual de-emphasis on Bitcoin, even if he secures re-election.
To combat this, the government has been working to build a strong domestic Bitcoin community. Initiatives such as the Lava Pool project, aimed at promoting local Bitcoin mining using renewable energy, have been pursued. Additionally, private firms like Distribuidora Morazán have partnered with Bitcoin platforms to encourage Bitcoin usage among businesses.
Other initiatives, such as the introduction of Lightning Network functionality to Bitcoin ATMs across the country, further demonstrate the growing confidence in Bitcoin’s potential. This upgrade will make Bitcoin transactions easier for Salvadorans, especially for small purchases.
President Bukele’s administration has taken an active role in fostering the growth of the domestic Bitcoin industry. Additionally, private firms are investing independently, showing confidence in the future of Bitcoin in El Salvador.
It remains to be seen how Bukele’s vision for Bitcoin in El Salvador will unfold, but with continued growth, El Salvador’s Bitcoin adoption could serve as a model for innovation worldwide.
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