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El Salvador's Controversial Bitcoin Year: A Timeline

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Decrypt

Mon, Dec 27, 2021

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At this year’s Bitcoin Conference in Miami in June, El Salvador President Nayib Bukele announced his country would soon accept Bitcoin as legal tender.

After months of protests and controversy, El Salvador’s Bitcoin Law took effect on September 7.

Here, Decrypt recaps for you everything that’s happened since El Salvador’s big Bitcoin push, from protests and Bitcoin volcanoes to illegal arrests and lawsuits.

But in El Salvador, Bitcoin took an unprecedented turn—it became a currency of choice for the state.

“Next week, I will send to Congress a bill that will make Bitcoin legal tender,” Bukele told the roaring Miami crowd .

Given Bitcoin’s perceived quality as a hedge against inflation, it became Bukele’s new Salvadoran currency of choice.

In June, the International Monetary Fund said El Salvador’s decision to adopt Bitcoin as legal tender raised several “macroeconomic, financial, and legal issues that require very careful analysis.” In the same month, the World Bank chimed in, saying it wouldn’t help El Salvador move to establish Bitcoin as legal tender due to concerns over the cryptocurrency’s lack of transparency, and well-documented damage to the environment.

“There are clearly important implications for that country, but it is difficult to see any tangible economic benefits associated with adopting Bitcoin as a second form of legal tender,” analysts at the bank said—also in June.

The BoE governor, Andrew Bailey, said that what worried him “most of all” about the country’s Bitcoin embrace was whether the “citizens of El Salvador understand the nature and volatility of the currency they have.” But the past seven months have suggested El Salvador’s citizens do understand Bitcoin—and don’t want it forced on them as legal tender.

Inside El Salvador, the rollout of the Bitcoin Law and its Chivo wallet has been far from smooth .

Bukele previously had said Salvadorans would not have to use Bitcoin if they didn’t wish to, but that hasn’t been the case.

In September, El Salvador’s law enforcement arrested well-known Bitcoin critic Mario Gomez— without a warrant .

Gomez’s legal counsel Otto Flores also said it was “not clear why Mario was handcuffed.” Amid El Salvador’s heavy-handed battle with Bitcoin critics, the country’s courts quietly went about the business of expanding Bukele’s grip on power .

Search Bukele's Twitter timeline for the phrase “ bought the dip ” and you'll get some insight into the president’s Bitcoin investing strategy.

To date, nobody knows who controls the country’s private keys—a serious issue considering the fact El Salvador’s Bitcoin is being added to the Treasury.

“There are so many things that are not being disclosed,” Nolvia Serrano, head of operations in El Salvador for BlockBank, said in September on the Decrypt Daily podcast .

Also, what’s the criteria for saying, ‘Oh, today, we’re going to buy more Bitcoin, or we’re going to wait until next month.’ We don’t know that." Serrano added, “There’s no space to make wrong calls on this, and we need to be transparent because the cryptocurrency community cares about these principles.”

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