Industry News Two-Sided Story of El Salvador’s Bitcoin Experiment

Two-Sided Story of El Salvador’s Bitcoin Experiment

January 18, 2022

Out of all the individual characters that make up the landscape of the cryptocurrency domain, one name has been gaining more traction in 2021 more than any other. That is  Nayib Bukele, the President of El Salvador. In many ways, he is the driving force behind a range of initiatives that began in this small Central American nation which all aim to turn bitcoin into a regular monetary tender. From modest beginnings on the international crypto scene, where Bukele did things like adding laser beams to his eyes on his social media profiles as a way of expressing support for crypto, the same name grew in relevance and significance over the course of last year. 

All of this culminated with the introduction of bitcoin in El Salvador as legal tender and the plans to build an entire city dedicated to crypto and its adjusted industries. All of this made him a darling of many who firmly believe that the future of bitcoin and crypto is to take over the world of finance and simply suppress fiat currencies to the point of extinction. However, there are also many other facets to the same story. This applies to  Nayib Bukele himself and the way he preaches the gospel of crypto and its decentralized values, but also how he actually governs not just when it comes to digital currencies, but many other domains as well.

Worrying Reports

There are a range of reports coming from El Salvador that point to a strong possibility that its president sought to undermine and shake the freedom of speech in his country. The investigation took place under the cooperation of local news media and several digital rights nonprofit groups from Canada. It showed that some 22 journalists had their digital devices infected using spyware and other malicious mechanisms like the notorious Pegasus software.

Additional journalists, as well as human rights activists, were also a target of the same process. The practice echoes systems that governments of nations like India, Mexico, and Saudi Arabia also employed, targeting what they labeled undesirables in these pressure campaigns. In all cases, the practice means adoption or continuation of an authoritarian government style that is at its core undemocratic and prone to some means of corruption. The case presented in El Salvador seems to mimic these approaches in many ways, even including the possibility of some kind of copy-paste methodology that completely recreated the strategy of some other government in this regard. 

Conflicting Drives

The report is already making some serious ripples inside of the bitcoin community. The adoption of bitcoin on the level of the entire nation is a huge development for the crypto space. For many bitcoin maximalists, the same equates to the start of the end of the fiat dominance and yoke of the global financial circles. With bitcoin in place to rival fiat money, the process of slow but assured user adoption could jump up many times over in the coming years. That could spell the widespread presence of bitcoin and crypto wallet, which is the first hurdle to mass adoption of bitcoin not just as a means of investment in esports and other digital-first communities, but as real digital money. 

The same money would then be used on a daily basis by regular individuals across the globe, much in the same manner fiat money is used as well. However, the benefits of digital currencies would quickly show their effectiveness and usability, rendering fiat currencies – including globally dominant ones like the USD – obsolete. But, this dream can quickly turn darker with the same authoritarian notes that the Bukele government seems to carry. The same kind of behavior and authoritarian tendencies are anything but the values of cyber freedom and libertarian notions that come from digital currency maximalists.

Pegasus Tool

Pegasus is the name of a spyware tool that NSO Group, an Israeli firm, produced a few years ago. It is able to gain access to the victim’s communications in real-time, but also penetrate deeper into the data of the same device. The investigation in El Salvador showed that at least 11 journalists were targets of the same tool, likely used by the government or some of its elements. There is a grim backstory to Pegasus. The same tool was linked to the world-famous murder of Jamal Khashoggi, a Saudi dissident and a columnist of the Washington Post. 

It was also involved in the killing of Cecilio Pineda Birto, a Mexican journalist that examined the workings of the government in that country. If the presence of the same tool is confirmed in El Salvador, it will not look well in the eyes of the international community. However, it will look much worse for anyone who might be interested in joining the country’s growing crypto community and its development options. These might even include power plans that generate electrical energy from the heat of an underground volcano. All of that might turn very sour if Bukele turns out to be a dictator in the making, which would not be the first such occurrence in that region of the world, even if it comes with a bitcoin flavor. 

No Social Frog Leap

The concept of a frog leap in a technological sense is something that has been very popular in the last 30 years or so. This notion believes that it is possible for developing nations to simply frog leap over some points in technological growth and apply new tech without having to use the old ones that the developed nations began to phase out. China and the use of green energy is a good example, showing that it is possible to introduce electrical power in remote locations through direct use of solar and wind. 

It is easy to see why the same notion might spill over into the realm of social changes. By accepting bitcoin, El Salvador could in theory leap over so many problems of other poor and underdeveloped nations in the region. Sadly, the recent allegations show that this might not be the case. Instead, even with laser eyes, a growingly authoritarian leader open to undemocratic mechanisms will remain just that.

Source: Coindesk