In a recent interview, Nayib Bukele, President of El Salvador counted on the benefits of adopting Bitcoin as a legal tender. He also revealed that the country’s tourism sector has increased by 95% since it embraced Bitcoin as an official means of payment.
Additionally, he criticized some central banking institutions, including the Federal Reserve, raising claims that their policies have washed out a big chunk of people’s savings. As such, the Salvadoran President expects a lot of individuals from the West to focus on decentralized financial instruments.
Bukele said that there have been benefits to adopting Bitcoin as a legal tender. Among them, the most important advantage was that it made the Latin American country much more attractive to travelers, subsequently boosting tourism by approximately 95%. He said:
“We have increased tourism by 95%, and that’s in part because of Bitcoin. There are a lot of Bitcoiners who want to go to the country where Bitcoin is legal tender, we have Bitcoin conferences.”
Around a year ago, Morena Valdez, El Salvador’s Minister of Tourism said that the local tourism industry went up 30% in the first three months after embracing Bitcoin. She explained that the nation has become highly popular with Americans, who accounted for 60% of all visitors.
In August 2022, Todayq News reported data from the World Travel Organization. According to worldwide rankings as of January 2022, the tiny Central American republic had become “one of the countries with the strongest rate of tourism recovery in the region.”
Following all this, Bukele maintained his stance in the interview that El Salvador has received “a lot of private investments” since jumping on the Bitcoin bandwagon. He also argued that one of the most fundamental benefits which the Bitcoin initiative has caused is “rebranding” the country’s legacy.
Previously, El Salvador was renowned as one of the most violent locations across the globe, reaching a peak of 103 killings per 100,000 residents a few years ago.
Bukele also criticized the actions of numerous central banks, such as the US Federal Reserve, blaming them for devaluing people’s wealth and erasing their savings. In his view, consumers in the Western world have already realized that dealing with centralized financial institutions is not worthwhile and will soon shift towards the decentralized finance (DeFi) sector.
Additionally, he praised Bitcoin for its global distribution and potential to fix economic inequity, claiming it is even popular in countries where the authorities have previously prohibited it. He said:
You can’t ban it. It’s uncensorable.
The adoption of Bitcoin as a legal tender in El Salvador has been a bold move and one that is being closely observed by the international community. The country is the first to adopt Bitcoin as a legal tender and its success or failure could set an example for other countries considering a similar move.
Given the history of El Salvador and Bitcoin, the strategy has received both criticism and support from various stakeholders. While the ministers of the state have counted on Bitcoin to have brought multiple benefits to the system including financial inclusion bringing in their unbanked citizens, the citizens think it to be in vain.
Around 77% of El Salvadorans, as per a research by the University of Central America (UCA) in October 2022, think that the country’s decision to accept Bitcoin as legal cash was a colossal failure. Additionally, 75.6% of the respondents admitted they haven’t utilized cryptocurrency this year. Simultaneously, it is important to note that despite the limited usage of cryptocurrency in the country, the International Monetary Fund recently highlighted various risks associated with its adoption. The IMF also emphasized the need for greater transparency in the government’s Bitcoin transactions.