El Salvador's President Is Obsessed With Bitcoin
Crypto is currently crashing, with Bitcoin as well as other coins like Ethereum all having what could generously be called a pretty rough week. This is bad news for the personal finances of crypto bros far and wide, who may have just seen their coffers almost halved in no time. However, it’s also very bad news for the entire country of El Salvador. This is because, thanks to a young president, Nayib Bukele, who is exactly as obsessed with Bitcoin as photos of him would suggest, a huge amount of that country’s financial reserves are held in Bitcoin. To the tune of $60 million, which up until very recently, was $100 million.
So you just lost $38 million of your country’s budget in the crypto market. What to do next? Well, to buy the dip, of course. He immediately bought $15 million more. Bless his heart. He is a true crypto bro to the end. Whether he wants it to or not, Bukele’s success or failure as a leader is now completely and inextricably tied to whether Bitcoin succeeds or not. So far, results are not great, with many expecting El Salvador to default on their national debt, something that was a concern even BEFORE tens of millions of dollars in the national ledger vaporized with a market swing.
President Bukele is nothing if not confident, however. Buying the dip, and continuing to discuss plans to build a “bitcoin city” complete with models and concept illustrations all feel like the actions of the leader of a country that is doing much better than El Salvador is. It’s fun to make the news, but residents of the country do need actual infrastructure at some point, not just promises of magical cities where the crypto flows like water.
Even worse, intrinsically tying bitcoin to the country’s finances has made other countries and aid funds hesitant to loan El Salvador any additional money at all. The International Monetary Fund perhaps said it quickest and best with their assessment: "Efforts to improve financial inclusion are welcome, but Bitcoin use carries significant risks and Bitcoin should not be used as an official currency with legal tender status."
I’m sure at the time, with Bitcoin enjoying a booming market, this was dismissed as the warnings of some goody-two-shoes wet blanket. But El Salvador is the one left in the cold.