Is Bukele tricking its population with the Bitcoin law?

The Bitcoin law is attracting more and more criticism – even among Bitcoiners: inside: authoritarian, short-term, undemocratic. And where does the money for the BTC starting credit on the Chivo Wallet come from?

No al Bitcoin – no to Bitcoin: At least since then, on Friday, August 27th, when many people (we’re talking about four-digit participants: inside numbers) took to the streets in the Salvadoran capital San Salvador, it is clear that the so-called Bitcoin law not only meets with approval. Protesters are bothered by the high volatility of the cryptocurrency, for example.

“We know that Bitcoin is subject to drastic fluctuations. Its value changes from one second to the next and we have no control over it, ”said Dante Mossi, executive president of the Central American Bank for Economic Integration (CABEI), to Reuters. Unfortunately, recent price movements on the Bitcoin market are grist to the mill of the skeptics. As attentive readers of BTC-ECHO should have already recorded, the introduction of the Bitcoin Act coincided with what is probably the strongest Bitcoin price correction in weeks.

The rate of the crypto reserve currency collapsed by no less than 13 percent on the afternoon of September 7th. What some aluminum hat bitcoiners saw as an orchestrated action by the International Monetary Fund (IMF) was in all probability due to an interplay of high-risk leverage positions and the market exit of some Bitcoin whales. Anyway. Anyone who warned El Salvador about the notorious Bitcoin volatility has another argument on the credit side with the recent price crash. The fact that BTC is still around 341 percent up year-on-year is, if at all, made public.

Criticism also comes from Bitcoiner: inside

But Bitcoiners also criticize the law – more precisely, Nayib Bukele’s authoritarian way of pushing it through. Of course, there was a vote in parliament in June, which voted for the introduction of the law with a large majority. Since Bukele’s party Gran Alianza por la Unidad Nacional (Great Alliance for National Unity) has an absolute majority in parliament, the vote in the end was only a matter of form. The short period between the passing of a law and the coming into force of a law with potentially significant political and economic implications were also a thorn in the side of many market observers. So writes u / sam-sung on Reddit that many congressmen had no idea what they were voting on (late at night, by the way). An article by in which the MP Reynaldo Cardoza is quoted as follows:

“I understand [das Gesetz] not, but we have to continue to support the Salvadorans because they are not to blame for the law, ”said Cardoza.

The law, which was passed quickly, could also become a problem for companies. After all, companies first have to design their IT infrastructure and complex accounting processes so that they can soon accept a highly volatile cryptocurrency.

From the Bitcoiner’s point of view, state decrees should be treated with caution anyway – even if they are passed out of goodwill. Bitcoin, a common stance on the scene, is a tool that has to be adopted voluntarily. Instead of top-down, the nature of the cryptocurrency as an anti-government vehicle envisages bottom-up distribution.

State coffers looted for BTC?

The Bukele government has also done itself no favor with the launch of the Chivo wallet, which is preferred by the official sites. As we had already reported at this point, the servers were temporarily overloaded, so that some: r Salvadorans: had to wait for the promised 30 US dollars in Bitcoin.

Speaking of $ 30. Where does the money come from that President Bukele wants to use to fill his new digital treasury? As La Prensa Grafica reports, mainly from pots reserved for the country’s health and education sectors. In order to tap into this, the country’s budget even had to be changed, as the newspaper writes. Parliament also approved plans to divert a total of US $ 500 million from a loan from the Central American Bank for Economic Integration (CABEI), which was originally intended for the economic recovery of small and medium-sized enterprises. Sure, hard money doesn’t just fall from the sky and Bukeles 550 BTC also had to be procured once.

Crypto apps dominate the app store

But it’s not all bad. Server failures are a nuisance during the Chivo launch. On the other hand, they indicate that the demand for Chivo and thus also for Bitcoin as a means of payment is not as low as the protests initially led to believe. A look at the charts in the app store there shows that BTC is actually meeting with brisk demand in the country.

In the finance sector, crypto-related apps dominate the action.

Even large companies are now forced to take a stance on digital gold at the latest. Because those who do not accept BTC have to expect sanctions. Javier Arguete, legal advisor to Salvadoran President Nayib Bukele, explained this in an interview on Monday, September 6th. McDonalds, for example, already accepts payments in BTC – even using Lightning.

Of course, the introduction of the first legal currency, which is not subject to any discretionary monetary policy, cannot proceed without difficulties. Should the citizens of El Salvador first get a taste for it and, above all, recognize Bitcoin’s advantage in terms of cross-border payments (remittances), El Salvador could actually become a kind of hotbed for the Bitcoin standard. Assuming that Bukele has not already lost all trust by punching through his plan.

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