Love them or hate them, understand them or not, chances are, that cryptocur-rencies in some form, are here to stay. Much like mar-mite, or ITV’s Love Island, if people have an opinion on it, it tends to be a strong one.
In this case, it’s easy to see which side Nayib Bukele, President of El Salvador is sitting on. Promising $30 worth of bitcoin to every citi-zen who downloads the na-tional app for a crypto wallet and formalizing it as legal tender. Differently to when they replaced their currency with the US dollar in 2001, on this occasion people will have the option (but not obli-gation) of receiving govern-ment salaries and pensions in either currency.
Not deterred by his nation’s poor internet connectivity, (Under 40% of the population have access, well under the average for the region) Nayib appears fully committed to the crypto revolution. This week, he announced that those who invest threebitcoin in El Salvador get permanent residency and for there to be no capital gains of the asset class. He even touched on the pro-spect of miners using his country’s volcanos for cheap geothermal energy.
The timing of this has been no coincidence, as all cryp-tos, bitcoin especially, have had trouble amid Chi-na’s growing regulation and crackdown on the asset class. Previously, China had been at the forefront of the crypto movement (both in mining and trading) but over the last few years, Xi’s appetite has soured. After a sweeping ban on both min-ing and trading, this week we have seen pressure on fintech/retail giants that allow the currency on their platforms. Unsurprisingly, as with many reserve banks, the People’s Bank of China is rolling out its own digital currency in the months ahead. Named the PBEC, it will act as a legal tender, digital yuan. Even less surprising is the nature of the coin — instead of opting for a decentralized struc-ture (that many other crypto’s boast about), PBEC transac-tions will be strictly super-vised and accessible by the Chinese government.
Whilst not many doubt the capacity of China to perform such a rollout, people have lower expectations for El Salvador. Institutions worldwide (from the world bank to the IMF) warned that this an impend-ing disaster. Even for China, a highly economically disciplined country, the idea of taxes or bonds being paid in a currency that can move by 20% in a day was clearly too much to stomach after a few years. Let’s see if El Salvador will be a permanent residence for Bitcoin, or perhaps Nayib Bukele will the first person ever to change their opinion on marmite.