Few nations on Earth have experienced the sort of economic and social change El Salvador has in the last decade. Widely regarded as one of the most dangerous Central American countries, it was essentially a no-go for any foreigners and had a chronic and systemic gang problem. Economically, El Salvador has faired better, but it was part of a contingent of countries within the continent that were considered extremely dangerous and economically subpar.
However, in 2019, when Nayib Bukele became the leader in El Salvador, his administration enacted some radical changes within the country, bringing the small Central American country onto the world stage.
Bitcoin As A Currency
Bitcoin emerged from the unknown corners of the internet, and debate and mystery still revolve around who the developers or developers of the now world-famous cryptocurrency actually are. When the whitepaper first emerged online, it began to pick up support in the small corners of the internet in the late 2000s. Even the most ardent supporters of the world's most prominent cryptocurrency couldn't have envisaged it would become a legal currency in El Salvador within 15 years. The use cases for Bitcoin and blockchain technology have spiraled in the Western world, too, so while it might not have the same widespread usage as El Salvador, it is picking up momentum as a currency, and it's helping to buoy up the price and highlight the intuitive nature of Bukele's bold move.
While you can use Bitcoin and other cryptocurrencies for transactions with some selected retailers in the West, it's not written into financial law and regulation like it is in El Salvador. Arguably, the strongest and best use case at the moment for countries that have yet to follow Bukele's lead is the emergence and strong performance of cryptocurrency gambling - predominantly casino gaming.
Bitcoin and online casinos do entwine on some level as they both use the latest technology and advances to try and add a fresh layer of convenience for users. So, for those cryptocurrency fans who enjoy casino gaming like poker, roulette, and blackjack, a crypto casino is a fantastic intersection where the two meet. Connecting your wallet directly to the provider, peer-to-peer, and depositing your cryptocurrency without having any concerns about your bank stopping the transaction is just one of many components driving the popularity of casino games. Although gambling is mostly illegal in El Salvador (apart from the lottery) - cryptocurrency gambling is proving to be a profitable avenue and popular method of gaming for many gamblers.
Economic & Social Reform
Since Bukele came into office in 2019, he has brought into force a range of strong measures to bring down the crime rate and stimulate the economy. This has divided people internationally due to the number of people the El Salvadorian leader has locked up awaiting trial. Overall, it seems like a strong move that is paying off, with his approval rating high and many people, especially in San Salvador, the capital, talking about how their lives have improved due to the removal of street gangs.
Other critics outside of the country are more vocal, with human rights activists stating that the sweeping moves to arrest first and question later breach human rights. The other side of this argument is that El Salvadorians were scared to walk the streets, and the murder rate has dropped by over 50%. Bukele has compounded this set of strong legislation to invite some of the world's most prominent technology companies to set up tax-free in the country. In addition, by making Bitcoin a legal currency, which was a world-first at the time, Bukele has shown himself to be a leader aiming for the future instead of reminiscing about the past.
The Impact Of Bitcoin
Bukele brought in his Bitcoin economic reform when the cryptocurrency market was soaring. As the price took a significant nosedive throughout 2022, many international analysts and experts said it was a gamble that didn't work. El Salvador also allows its citizens to transact in US Dollars. Still, with a growing rhetoric that the Dollar is losing its power on the world stage, Bukele was keen to continue growing Bitcoin adoption within the country.
Initial teething problems were understandable because it's such a radical financial change. But Bitcoin's price rebounded sharply in 2023, almost doubling in price following the collapse of FTX. This resurgence meant that El Salvador could reshape a lot of its debt and see the value of its Bitcoin appreciate significantly due to buying the dip.
Economists are still unconvinced that this is a solid long-term plan. Although Bukele isn't perfect, his ability to unite the country and eradicate its systemic multi-generational gang problem is something that other leaders have praised. As he continues to double down on his Bitcoin promise, any international cryptocurrency regulation will prove pivotal in the medium to long-term prospects and existence of Bitcoin within El Salvador.
Ultimately, the pivot away from overreliance on the US Dollar and a move to get on board with a financial innovation is a huge gamble, but it is a risk that could prove to pay off. On the whole, people in El Salvador are happy with the crime rate and social prospects now available within the country. If Bukele can use it as a springboard to bring in some of the world's largest tech and AI companies, it could propel the company as one of the most innovative and best places to invest long-term anywhere in the world.
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