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With less than three months to go until President Nayib Bukele’s re-election date, bitcoin is seeing continued increases in institutional support within El Salvador, suggesting a solid foundation for the country’s experiment with bitcoin as legal tender.
The election season is entering full swing in the Republic of El Salvador, and the actual vote to elect president is scheduled for February 4, 2024. Vote for a possible election has shown that he has an overwhelming advantage over his competitors for months, although there has been a lingering doubt about his eligibility to seek re-election. As of early November 2023, the courts have officially declared his candidacy valid and, from the current point of view, seems on track to win a second term. Bukele has been famous for a few different political decisions; Although much of his national popularity is due to his crackdown on gangs, his presidency has been particularly recognized internationally for his campaign to make bitcoin legal tender.
El Salvador officially adopted bitcoin as a valid currency in September 2021 after several months of effort, and since then the country has hosted an experiment of historic proportions. Many of the world’s financial institutions have demonstrated considerable and persistent opposition to this experiment from the beginning, and for quite simple reasons: before Bukele added bitcoin, the only legal currency in El Salvador was the US dollar. This situation put El Salvador in an unenviable situation in which another country had a direct and powerful influence on all economic matters. Removing this leverage was a major motivator, but there are many other benefits of a borderless currency in an economy like El Salvador’s: for example, international exchanges bitcoin-move-could-cost-western-union-400-million-a-year.html”>remittances They are an important source of income for many Salvadorans, and bitcoin offers a way to eliminate traditional financial intermediaries like Western Union.
Although these two years have been marked by increasing difficulties, there are now many clear signs that El Salvador’s new economic model is gaining acceptance in the broader global economy. For example, the S&P updated the nation’s credit rating in November, citing consistent efforts to manage its debt obligations and overall economic stability. A major boost to this growing stability has been bitcoin and its new opportunities, as tourism has bitcoin-boost-tourism-growth-in-el-salvador/?sh=503659e159a6″>increase Visitors from the United States have doubled since Bukele first took office. The Bukele administration attributes this success to bitcoin, with Vice President Ulloa calling it the “driving force” of the “country’s rebirth.” The data seems to confirm this, as El Salvador has become popular among full-time foreigners. bitcoin-gamble-paid-off/”>residents in addition to tourists, due to the ease of use of bitcoin in daily life.
So, with all these factors pointing to bitcoin playing an important role in the economic development of the country, it seems natural that this policy will become a well-established feature of the nation in the coming years, right? There has only been one setback with this plan, and that is that the population has still shown some bitcoin-confidence-in-el-salvador/”>reluctance adopt bitcoin on a large scale. Although it certainly has a no small number of adherents, the country is far from a state of hyperbitcoinization, where most people use the currency regularly or exclusively. Given that most of Bukele’s domestic popularity comes from his reputation as a crime fighter, it is not inconceivable that even a successful re-election could gradually cause bitcoin to lose importance.
However, it seems that greater institutional support will prevent this setback from occurring. The government has consciously taken actions to facilitate a powerful national bitcoin community in the country, such as its continued contributions to the Lava Pool project, which seeks to encourage local companies to emerge in the bitcoin mining business, all using renewable energy. Although projects like this have been helpful in creating a new ecosystem, the government cannot do it alone. Fortunately, it will not be necessary, since large investments are being made without direct stimulus from the State. Distribuidora Morazán, the second largest product distributor in El Salvador, announced that it would accept and incentivize bitcoin through a partnership with the Blink wallet and API platform. The company does not supply products directly to consumers, but acts as an intermediary: it sells its products to around 40,000 merchants throughout the country.
In other words, Distribuidora Morazán hopes to increase Bitcoinization with business-to-business (B2B) transactions, and is actively encouraging these companies to accept and promote bitcoin as well. The company’s CEO, Jacir García-Prieto, stated that “our distribution operation, to date, has been managed predominantly in cash and this presents a series of logistical, time and operational difficulties that slow down our daily capacity. to visit more points of sale. . bitcoin solves that.” He added that “the vast majority of our customers are unbanked and this is the perfect way to introduce them to their first financial tool.” Within days of its launch, the plan was implemented among dozens of merchants and they hope to reach 1,000 next year.
This is not the only major commercial initiative that will take place at this time, as bitcoin ATM providers Athena and Genesis Coin have also done so. bitcoin-atms-in-el-salvador”>started a plan on November 8 to add Lightning Network functionality to bitcoin ATMs nationwide. Although there have been some stalled attempts to introduce this vitally important second layer solution in El Salvador, the persistent push to try again shows real confidence that it will be a profitable investment. The Lightning Network allows bitcoin wallets to make much smaller transactions without delays or high fees, and is often considered more or less essential when using bitcoin for small purchases. For Salvadorans who decide to try bitcoin, this new update will make the experience much easier.
Everything seems ready for El Salvador’s bitcoin experiment to become a full-fledged economic institution. President Bukele has managed to carry out a remarkable transformation in his first term, and no one knows to what extent he could continue the project with a few more years at the helm. Although the majority of the population remains skeptical of bitcoin itself, they still love its management in general, and now many of the toughest growing pains are in the rearview mirror.
Bridges are being rebuilt with financial institutions around the world and bitcoin is generating huge tourism dollars; More specifically, trust is growing. The Bukele government has been actively involved on several occasions trying to grow the national bitcoin industry, but other private companies have decided to invest independently. Even if the need to win re-election and maintain a normal administration occupies much of Bukele’s focus, companies like Distribuidora Morazán are more than capable of advancing the vision. With a few more years of growth like this, bitcoin adoption in El Salvador could really become an economic model to inspire innovation around the world.
