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El Salvador Should Have Invested in LoomCoin

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El Salvador’s techbro president maaaaaaaybe didn’t think this one through:

Bitcoin was meant to transform El Salvador’s economy, catapulting the poor Central American nation into an unlikely harbinger of a financial revolution.

But nearly a year after the country’s president, Nayib Bukele, shocked the financial world by making its most popular digital coin a national currency, his bet appears to be backfiring, highlighting the gap between the utopian promises of cryptocurrency’s proponents and economic realities.

The government’s bitcoin holdings have lost about 60 percent of their presumed value during the recent market plunge. The use of bitcoin among Salvadorans has collapsed and the country is running out of cash after Mr. Bukele failed to raise fresh funds from cryptocurrency investors.

Wait, are you telling me that Central American governments investing in American speculative capitalism might backfire? I mean, that’s never happened in Latin America before!

Last year, his government allocated the equivalent of 15 percent of its annual investment budget to try ingraining bitcoin into the national economy.

It offered $30 dollars, nearly 1 percent of what an average Salvadoran earns in a year, to every citizen who downloaded a government-backed cryptocurrency payment app called Chivo Wallet; chivo means “cool” in local slang.

Oh well, when Trump starts issuing his personal BroBucks in 2025, I can think of a lot of Americans who will jump on board.

Mr. Bukele claims that nearly 3 million Salvadorans, or 60 percent of adults, heeded his call.

Yet, after the initial uptake, the use of cryptocurrency has plunged.Only 10 percent of Chivo users continued making bitcoin transactions on the app after spending their $30 stipend, according to a survey conducted by three American-based economists in February and published by the National Bureau of Economic Research. Almost no new customers downloaded the app this year, the researchers found.

“The government gave this project as much push as you could hope for, and it still failed,” said Fernando Alvarez, a University of Chicago economist and an author of the study.

A separate survey by El Salvador’s Chamber of Commerce in March found that only 14 percent of the country’s businesses made bitcoin transactions since it was introduced in September, and only 3 percent said they perceived any business value in it.

Salvadorans in the United States have also ignored Mr. Bukele’s call to use bitcoin to send money to relatives back home. Digital currency payment apps, such as Chivo, accounted for less than 2 percent of remittances in the first five months of this year, according to El Salvador’s central bank.

I mean, just because the president of El Salvador is stupid doesn’t mean that the Salvadorans in the U.S. to help their families at home survive are stupid.

And in fact, in 2020, the per capita income in El Salvador fell from $4,000 to $3,600. Ugh. That has nothing to do with Bukele’s cryptofantasies. It’s just a poor, poor country.

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