Monday 27 September 2021

Flaws in Bukele’s digital wallet ruin bitcoin debut in El Salvador

Technical setbacks, protests and a growing risk of promoting money laundering marred the start of operations of the 'Chivo' platform, which faces operational problems and Bukele recognizes it

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Q24N – The Bitcoin debut in El Salvador as an official currency was not as “chivo” as Nayib Bukele expected. The millennial president, who in recent months has shown the most authoritarian side of him, opted to baptize his digital wallet with the term used in the country to refer to something good, cool or cool, but he failed to live up to the name.

Nayib Bukele completed his project to make El Salvador the first country in the world to adopt bitcoin as its official currency. (PanAm Post)

Technology and uncertainty played a trick on him. Technical setbacks, protests and a growing risk of promoting money laundering marred the start of operations of the platform that faces operational problems.

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Bukele admitted it.

In his Twitter account, he shared a screenshot with the message that the application has been showing and invited his followers to report any problem through the same social network.

This represents an initial blow for his project, since his office bought the first 400 cryptocurrencies for a value of around US$20 million dollars

Bukele promises that the failures will pass. According to him, it is better to go “slowly”. Therefore, the application can only be downloaded on some cell phone models. In this regard, the newspaper El País reveals that “the operating rules are not entirely clear. The president said that the use of bitcoin will be optional, but the text of the law reads that every economic agent is obliged to accept it as a form of payment when it is offered to him by whoever acquires a good or service ”.

Opposition in the streets

In front of the Legislative Assembly in San Salvador the climate was different.

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“Enough corruption, no bitcoin”, “No corrupt money laundering”, “I say no to bitcoin”, “I totally reject bitcoin” read the banners of those who demonstrated against it.

The Order Maintenance Unit (OMU) of the National Civil Police (PNC) repelled them along with the judges who jointly requested the repeal of the use of cryptocurrency as official currency and the reforms to the Law of the Judicial Career, asking that the magistrates of the Constitutional Chamber of the Supreme Court, who were dismissed from their functions by the Assembly dominated by a pro-government majority, be restored.

A circus

The geeky president – a technology lover – specified his project to make El Salvador the first country in the world to adopt bitcoin as its official currency, ignoring the result of the survey by the Public Opinion Institute of the Central American University, cited by CNN, which places the rejection of the use of crypto active in the country as a legal tender at 67.9%.

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“Bukele is updating the bread and circus. Now it is bitcoin and circus ”, he affirms in his editorial in El Espectador, in view of the fact that“ the imposition of the digital currency – highly volatile – as official in the country was done without further discussion and silencing its critics ”to win“ international applause. of hundreds of digital crypto investors who see in El Salvador a tax haven to continue promoting their interests ”.

The frenzy will be temporary. The distrust among the population in the face of the abysmal falls of digital currencies overnight turns this disposition into just a show, which is far from generating the necessary stability to build an economy around it.

Populism in the networks

Bukele evades that reality. It’s his bet. For him, this implementation will attract new investments on the one hand, and on the other, it will reduce the commissions that are paid for sending remittances from abroad, which according to the Central Reserve Bank of El Salvador, reported transactions that amounted to 5,918 .000 dollars last year.

In his social networks, he shares memes and responds to his critics with messages worthy of trolls for questioning the application that allows you to withdraw dollars at 200 ATMs (‘Chivo points’) and obtain a bonus of $ 30 in bitcoin to those who download it. Here is one of the memes shared by the president of El Salvador on his official Twitter account:

It would be entertaining if it did not hide that it “dismantles democratic institutions like Chávez, but at a much more alarming rate”, according to José Miguel Vivanco, director of Human Rights Watch for Latin America, who recalls that “Chávez managed to control the Supreme Court of Justice in 2004 (5 years after assuming the presidency) “and” Bukele managed to control the Supreme Court in 2021 (2 years after assuming the presidency) “.
Limitless ambition

The highlight of Vivanco’s comparison is that “Chávez managed to bypass the limits to presidential re-election in 2009 (10 years after assuming the presidency)” while “Bukele, in 2021 (2 years after assuming the presidency)” the same with the support of the Constitutional Chamber that reversed a week ago an interpretation of the Magna Carta of 2014 that prohibited presidential re-election for 10 years after leaving office. This opens the way for Bukele to run for re-election in 2024 without having to wait until 2034.

It’s curious. Times change and the faces in power rejuvenate, but the tactics of authoritarianism remain the same. Only this time, in the Central American nation, the president with maneuvers that combine marketing and populism tries to convince that he, and only he, can solve the country’s problems.

In return, he encourages the powers to bend to his wishes, that no one criticizes him and that his enemies are silenced and marginalized. Hugo Chávez achieved it, Daniel Ortega puts it into practice and Bukele is also consolidating it. “This is how democracies die”, warns the editorial of El Espectador.

“What’s Next?

If we are guided by the history of Venezuela: censorship of the press, restrictions on civil society, total impunity for human rights violations, arrests of opponents, electoral fraud. The question he leaves in the air is whether the international community is going to wait and see if Bukele follows the trend? ”, Rebukes Vivanco.

Without a concerted, timely and forceful international response, Salvadorans may suffer the same fate as millions of Nicaraguans and Venezuelans who resort to international protection in the absence of a system of institutional checks and balances in their countries of origin.

For the New York Times, “it may soon be too late to prevent an absolute retreat towards authoritarianism in El Salvador.”

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Q24N is an aggregator of news for Latin America. Reports from Mexico to the tip of Chile and Caribbean are sourced for our readers to find all their Latin America news in one place.

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