Is El Salvador Benefitting from Bitcoin? \ stacker news ~bitcoin

pull down to refresh

Is El Salvador Benefitting from Bitcoin?

1043 sats \ 23 comments \ @kr 5 Jul 2022 bitcoin

Below I’ve collected a handful of stats that highlight some of the macro-economic changes El Salvador has seen since adopting Bitcoin as legal tender.

It’s possible that some or all of the changes below were impacted by COVID, inflation around the world, and Nayib Bukele’s efforts as President, so it’s hard to attribute these developments to Bitcoin specifically.

We may need a few more years of data to be sure, but overall it seems like El Salvador is trending in the right direction over the last year or two.

Thoughts?

El Salvador GDP was +2.4% in Q1 2022, while US GDP was -1.6% in Q1 2022.
El Salvador’s annual inflation was 7.5% in May, the second-lowest inflation rate in Central America which averages 8.3%, and lower than the 8.6% in the US.
El Salvador expects to see 2.6% GDP growth in 2022, a rate that exceeds their 20-year average of 2%.
From January to May 2022, family remittance volume was up 3.89% over the same period in 2021, totalling $3.15 billion.
Remittances made through Chivo amounted to $52 million from January to May 2022 according to the President of El Salvador Central Reserve Bank Douglas Rodríguez, totalling 1.65% of remittance volume in the country.
El Salvador’s energy generation in March was up 13%, with 70.9% of it coming from renewables.
El Salvador’s maritime transport services were up 12.1% in March 2022 vs. March 2021.
Formal employment in El Salvador was up 7% in Feb 2022 vs. Feb 2021, with 60,000+ new jobs added (almost exclusively in the private sector).
El Salvador welcomed 521,000 tourists in Q1 2022 who spent $353M, up from 197,000 tourists who spent $236M in Q1 2021. This year, tourism in El Salvador is expected to double last year’s numbers.

view all related items

234 sats \ 10 replies \ @taxd 5 Jul 2022

In my eyes it is a failed experiment. My Salvadorean friend says that nobody wants Bitcoin and one of their strongest fears is that the government starts to pay them in Bitcoin. I can also bet my farm that nobody demands to get their salaries in Bitcoin even in El Zonte (expect the very few americans surfers who work for btc-companies and they don't count). There is simply no incentive to use Bitcoin and the UI is terrible on all wallets (such as having to scan a QR-code). Is there any normal company (Starbucks, beer halls, movie theater, ...) there that gets a tax break by using Bitcoin? Anybody using a Bitcoin card? Anybody who even has a POS-terminal that can be blipped?

The only way to kickstart a circular economy is by sufficiently strong tax breaks when using Bitcoin such that farmers demand to be paid in Bitcoin. Nothing else will work.

233 sats \ 1 reply \ @2bithits 5 Jul 2022

They will like it when it goes up again.

Everyone needs to learn. It is often the hard way

21 sats \ 0 replies \ @kr OP 5 Jul 2022

Good point, we need to filter out the effects of Bitcoin’s price since it’s basically been all downhill since fall of 2021. Easier said than done though.

What will a rising Bitcoin price do to adoption & economic stats in El Salvador? Time will tell.

228 sats \ 1 reply \ @nerd2ninja 5 Jul 2022

Did you know that in traditional finance, stock performance is critisized on a 10 year basis?

Lets not say whether it has failed or won on the basis of a year. In 10 years, we can say with more certainty, but in the meantime, there is a lot of work to do for sure.

21 sats \ 0 replies \ @kr OP 5 Jul 2022

I think this is the correct time frame for making judgments here, wish we all knew this when setting expectations on day one.

100 sats \ 1 reply \ @servandofinn 5 Jul 2022

I would expect nothing less from people who are not professional investors. Of course people don't want an asset that has depreciated so much in a year. But that doesn't mean they know what's best for themselves.

The people your friend spoke with probably don't receive money from family members overseas. Maybe they have no need for banking services at all and live with cash.

The UI issues are completely shortsighted. You don't think these simple issues will resolve in no time?

There are no tax breaks needed. All that has to happen for people to come around to bitcoin is for the US Dollar continue being the alternative, for the Fed to continue controlling monetary policy of said dollar, and for Bitcoin to continue being limited to 21 million.

0 sats \ 0 replies \ @taxd 6 Jul 2022

Right, these people are normal people who work in e. g. transportation. I don't know if they get remittances. My friend has severe problems with money transfers to El Salvador.

Since the UI issues have not been resolved during the last ten years I doubt they will be resolved during the next decade either.

No tax breaks needed? Everybody prefers USDT to btc for starters. It doesn't matter what academics say, people don't want btc until it is usable and adds value (e. g. via tax breaks). The don't know who Powell is and couldn't care less about the Feds policies.

31 sats \ 1 reply \ @kr OP 5 Jul 2022

I think many Bitcoiners assumed the country would embrace Bitcoin right away, which clearly hasn’t happened yet. However, I’m hesitant to give a verdict on the success or failure of the project, we don’t even have a full year of data yet.

Re-wiring the entire financial infrastructure in El Salvador to be built on Bitcoin will take many years. I get the sense that Nayib Bukele is in it for the long haul, and am cautiously optimistic over the next decade.

When you say tax breaks, are you referring to income tax breaks? I believe they already have a 0% capital gains tax on Bitcoin.

0 sats \ 0 replies \ @taxd 6 Jul 2022

I mean e. g. that business using btc gets a tax break for maybe five years or pay half the tax of fiat companies. If they pay their empolyees in btc. They will then raise the btc-pay and the employees will happily accept it and a circular economy starts.

Nothing else will work, in particular politics, btc-messiahs, public speeches and billboards will not work.

Note that most small businesses in El Salvador run on cash and pay no tax so what I say apply to bigger businesses.

0 sats \ 0 replies \ @TheBTCManual 6 Jul 2022

I was about to say the same thing, I've spoken to some salvadorean people online and they really like bitcoin is a gimmick for tourism, no one really using it, the chivo wallet has been a disaster

The stats referenced above are all massaged vanity metrics, we all came out of covid ofcourse things are going to go up, if you chery pick the right time frame

0 sats \ 0 replies \ @iguano 6 Jul 2022

We are in a bear market... what do you expect?

90 sats \ 2 replies \ @zuspotirko 5 Jul 2022

The other post on ElSalvador at the moment says that it would have been better in a slow and steady adoption and without the Chivo App Ponzi.

That sounds quite plausible to me but there probably is no way to know for sure - especially for someone like me who has never been there.

0 sats \ 0 replies \ @servandofinn 6 Jul 2022

As an El Salvadorean, I would've downloaded the Chivo app, collected my $30, realized it was crap, and then downloaded Muun.

I'm not sure what the problem is. Is Chivo the main fiat on ramp? Are there ATMs widely available?

0 sats \ 0 replies \ @kr OP 5 Jul 2022

Slow and steady is actually how El Salvador’s Bitcoin adoption journey began. Organic adoption at Bitcoin Beach happened well before the Bitcoin Law came into effect.

I think of Chivo as an addition to their Bitcoin ecosystem, but by no means the only solution.

70 sats \ 0 replies \ @KingZing 6 Jul 2022

El Salvador is not really in a good spot.

Their bond credit rating has taken a big blown, and them delaying the bitcoin bond is not ideal, especially when the market is doing so horrible. Their pet hospital only cost 25cent per visit when paid in btc, this is a huge running loss for them imo. The bitcoin city is a giant investment.

They really aren't exactly financially healthy to be doing all of the above. They should have minimize all the other investment and purely focused on getting bitcoin tax free and easy to use, let the market does its thing.

69 sats \ 1 reply \ @TheBTCManual 6 Jul 2022

And what does that mean for the average person? Has it remarkly improved their standard of living because that was the promise, throwing cherry picked figures around is just PR, where are the figures like

Average savings increase
Increase in wages
Increase in businesses, and jobs you say 60k jobs, but how many were lost prior to covid, come on man

Things that really matter to the man on the street, if you're going to rate bitcoin, rate it against the factors that make a real difference to people. I am bullish on it, but lets not orange wash things lets face reality

0 sats \ 0 replies \ @kr OP 6 Jul 2022

These are all good questions you’re asking.

As I said above, it’s hard to figure out if Bitcoin specifically has impacted El Salvador, as the effects of covid, inflation, and Nayib Bukele’s policies could also be playing a role in these trends. Feels like we need more data to know for sure.

69 sats \ 0 replies \ @premitive1 5 Jul 2022

Looking forward to the result of the next presidential election!

0 sats \ 2 replies \ @nerd2ninja 5 Jul 2022

Translated interview that you're referencing: https://odysee.com/-en--FRENTE-A-FRENTE-5-DE-JULIO-2022:4

So far I've gotten that El Salvadorian inflation was curbed due to price controls on oil which will lead to gas shortages. More to come

Also this translation cost me $17 so uh...yeah.

0 sats \ 1 reply \ @paul 6 Jul 2022

was the $17 for a person or AI?

0 sats \ 0 replies \ @nerd2ninja 6 Jul 2022

An AI lmao. If I make this a regular occurrence I'll probably load a Github project in a docker container, but I think this is a one off thing so I decided the time it would take to set up a docker container and troubleshoot install issues from an open source project that's probably using outdated dependencies was worth $17 lol

0 sats \ 1 reply \ @selfish_gene 5 Jul 2022

биткоин создан для движения. чем больше транзакций тем больше сеть

80 sats \ 0 replies \ @nout 5 Jul 2022

Only couple folks here can read Russian а́збука. So you would probably earn more sats by posting in english (before we have language specific subs...)