In early June, a pre-recorded video informs the citizens of El Salvador that they are about to take part in a spectacular experiment. The speaker was Nayib Bukele, the country’s 40-year-old president, who said he had a plan for a better future: bitcoin. The cryptocurrency will become the country’s legal tender, he said, the first in the world to raise it to the same legal status as the US dollar, El Salvador’s national currency since 2001. It will help the unemployed, he added, and those who are behind banks. But for a plan designed to help the struggling Salvadorans, they were clearly absent; Bukele did not even speak Spanish. Instead, the announcement was made in front of an applauding crowd of international bitcoin enthusiasts at a conference in Miami.
In the capital of San Salvador, Mario Gomez, a charismatic 36-year-old software developer and founder of a “hacker space” for fellow coders, was skeptical. “I’m not entirely convinced of everything these people are selling,” he later explained. An admirer of open source technology, he is not considered an enemy of bitcoin, but was concerned about the way the government seems to be forcing bitcoin on its people. So he took to Twitter. In the following weeks, his criticism of the plan grew, as did his followers.
On August 31, Gomez tweeted several expired slides of an app called Chivo, the government’s upcoming bitcoin portfolio, along with critics. The next morning he drove his mother to work, as usual, when he was stopped by the national police. There was a problem with his car, officials told him, but they did not want to tell him what the problem was. Gomez remembers feeling confused rather than terrified. He quickly wrote a message to his 8,000 followers on Twitter before officers confiscated his phone. His mother photographed him loaded in the bed of a police truck, which took him to a nearby bus stop and then to another, where he said he was denied access to a lawyer. Meanwhile, a protest spread on Twitter demanding his release. Six hours later, authorities released him.
El Salvador police have since said Gomez is under investigation for unspecified financial crimes, although no charges have been filed. Gomez and lawyers for Cristosal, the human rights group that represents him, say his detention is linked to information he shared about Chivo and is an act of intimidation. His phone was never returned, but he has since returned to Twitter, where he insists he is still just a person who gives opinions about his work. He finds it rather ironic. Bitcoin has long been considered a beacon of freedom by banks and governments. Yet, in some ways, by opposing his country’s embrace of bitcoin, Gomez has become a reluctant political dissident. The National Police did not respond to a request for comment.
A strong man appears
Bukele’s June bitcoin announcement came as he stepped up his power. The first sign of a growing strong man appeared a year earlier, when, after losing a legislative vote, he entered the country’s Legislative Assembly, surrounded by armed police and soldiers. Sitting in a chair reserved for the chairman of the legislature, Bukele prayed to God, who later said he had told him to be patient. He didn’t have to wait long. In May, after securing a super majority in the legislature, Bukele’s coalition voted to remove the chief prosecutor and all five members of the country’s constitutional court and replace them with loyal ones. Shortly afterwards, Bukele plans to extend his presidential term beyond normal limits.
El Salvador’s authoritarian turn brought warnings from the United States, which sanctioned Bukele’s close allies for corruption and said it would transfer aid from the government to civil society groups. But in El Salvador, Bukele remains popular, with polls showing an approval rating of more than 80 percent. For a while, he changed his Twitter biography to “The Coolest Dictator in the World.” American military leaders from the past, “said Eduardo Gamara, a political scientist at the International University of Florida.
Bukele presented bitcoin as an opportunity for Salvadorans, especially as a way to circumvent high taxes on people receiving US dollars from abroad, a flow that accounts for almost a quarter of El Salvador’s economy. He confidently predicts that the value of bitcoin will jump, which will bring wealth to the country. But despite Bukele’s popularity, ordinary Salvadorans seem unsure of who will benefit. A September poll found that more than two-thirds of Salvadorans disapproved of the Bitcoin law, and protests against the use of tax money to buy volatile cryptocurrencies attracted thousands. Activists such as Gomez say the government has moved too fast and that people who are fighting, Bukele says he wants to help, are more likely to suffer losses. In the survey, the biggest concerns of respondents about bitcoin were its volatility and that they do not know how to use it.
But bitcoin efforts have only grown in scale and noise in recent months – much of it due to Bukele’s personal Twitter account. The government is pushing for measures to attract foreign investors, including $ 1 billion in bitcoin-backed bonds, weak economic zones, tax breaks and permanent residences for high-dollar investors. These policies are largely shaped by a small group of presidential advisers, many of whom are foreign, according to people involved in the discussions.