El Salvador: Bukele’s Bitcoin Law is rejected by the masses!

Last week, in a desperate gamble the Bukele government in El Salvador introduced a new Bitcoin Law that will make the volatile cryptocurrency legal tender in the Central American nation. The measure has been extremely unpopular and has met with all manner of technical and political problems. Since the first of these two articles was written, a massive protest of 10,000 people against the Bukele regime took place on 15 September, marking El Salvador’s 200 years of independence. The comrades from the Bloque Popular Juvenil (Salvadorean section of the IMT) participated actively.

Read the original in Spanish here |

by Santos Alfaro - Bloque Popular Juvenil

Improvisation and rejection – the first day of the Bitcoin Law

On 7 September 2021, El Salvador awoke to a new adventure in monetary policy. 21 years after the Monetary Integration Law, which saw the disappearance of the national currency, the ‘colón’, an increase in prices, and the plummeting purchasing power of the Salvadoran working class, the ‘Bitcoin Law’ has been a topic of nationwide interest. Indeed, this adventure appears to be dangerous, without any clear intention of maintaining or even improving the quality of life for the Salvadoran working class, which continues to live in precarious economic conditions.

Previous analyses have identified the impossibility of liberation via technological advances within the framework of capitalism, the basic engine of which is the exploitation of man by man. Any and all technological advances are placed in the service of exploitation for the sake of capital.

The Bukele regime’s first setback

Nayib Bukele's climb to power has advanced by leaps and bounds since 2011, when he officially ran for mayor of Nuevo Cuscatlán. After this first victory however, his political performance has been inconsistent and ambivalent. In his first years as mayor, he tended to draw closer to progressive elements on the left, putting forward an ostensibly fresh and liberating discourse that was intended to distance him from traditional politicians.

However, since becoming president, Bukele has adopted reactionary and anti-democratic policies typical of regimes which have nothing new to offer. These reactionary turns have, for instance, included the militarisation of the Legislative Assembly in order to approve a loan; the militarisation of the youth; the arbitrary removal of his opponents from various state departments; constitutional reforms without popular consultation; and, just recently, clear political manipulation in order to be reelected to the presidency.

Throughout his political career, Bukele has become well known for saying exactly what he needed to say to the general public in order to remain in power. Coupled with the debacle of the left, this has allowed him to continually consolidate and maintain broad levels of approval. However, in the course of his whole political career, he has seen no setbacks as big as the one he is currently facing on account of the unpopularity of the Bitcoin Law. His skill at persuading the masses with the words they want to hear is no longer having the effect it once had. Big promises naturally demand results, but the path of the Bukele administration has increasingly revealed its true goal: to deepen existing inequalities and to perpetuate the historic misery of the working class.

At first glance, the Bitcoin Law appears to be a whim of the Bukele family. But at its root, the regime simply seeks liquidity. This urgent need has seen the law implemented inconsistently and in the characteristic improvised manner of the president.

From the express analysis of the law by the Legislative Assembly to the launch of the ‘Chivo Wallet’ app, Salvadoran society has been given a clear indication of the possible negative implications that this law introduces. Issues such as the clear mandate on the obligatory use of Bitcoin resulting in the payment of salaries and debts with cryptocurrency (although the Executive insists that this is optional), uncertainty regarding the high volatility of the value of crypto assets absorbed by its users, and the payment of taxes are some of the biggest concerns.

On account of the massive setback that this law has meant for the Bukele regime, efforts have been redoubled to silence the voices of concern of those exercising their legitimate right to free speech to educate the people and prevent possible difficulties flowing from the law. We have cases such as that of Mario Gómez, a computer scientist, who was the first political victim of the Bukele regime. These are indications of what is to come for the Salvadoran people if the interests of the Bukele administration and the bourgeoisie behind it are not followed.

Impenetrability, problems and more improvisation

The technological implementation of the Bitcoin Law did not take into consideration basic aspects required to guarantee its success, specifically in the designing of the ‘Chivo Wallet’ application. Since its launch, it has become blatantly apparent that the app was improperly planned, lacking in preparation, time and sufficient analysis, leading to significant technical errors. For instance, it has been impossible to download on most mobile phone platforms; it has been riddled with system errors and errors in system validation in general; there is a lack of encryption of sensitive data; it makes possible invasive permission requests for microphone access. Furthermore, this new way of receiving or sending payments will have negative repercussions on the national economy. The poor reception of the application can come as no surprise given these errors.

From its inception to its launch, everything related to the Bitcoin Law has been inscrutable and secretive. This is despite the fact that approximately $205,000,000 is initially being allocated to the project, even as the country’s economy is dying in the midst of a capitalist crisis exacerbated by an unprecedented health crisis that ought to set other priorities ahead of investing in crypto assets.

On the same day that the application was launched, the president announced on his Twitter profile that the government had acquired 200 bitcoins at a price exceeding $50,000 each with government money, which at the time of its announcement amounted to around $20 million.

It should be noted that under the capitalist system – which encourages all kinds of speculative activities – the logic of the participants in the world of Bitcoin and cryptocurrencies in general, is to buy Bitcoin when its value is low and sell when the value is high, which at the same time, in view of the events, the government did not actually do. Later, the president reported that the country had bought another 140 bitcoins, insinuating that it took advantage of the fall in value that plummeted 19% between 6-7 September, reaching a low of $42,900.

During the morning of 7 September, the president announced the first problems of the wallet app then being developed, making up excuses for it, assigning blame on technical problems that the staff in charge of the development and operation of the system have to solve. But it is well known that in any system implementation, and particularly for a technological solution of this magnitude, these technical aspects must go through exhaustive testing stages. Scenarios must be replicated in which a given application interacts with a specific number of users at the same time and creates automated tests modeled according to the demands that the product will face in order to measure response effectiveness. Finally, it must also take into account any possibility of failure in execution even after its official release.

Not every company will use the Chivo Wallet

A very important plank of the implementation of the Bitcoin Law is its acceptance by businesses, both large and small, including the informal sector. Although it is true that only the law and the official government wallet have been launched as of the day prior to writing this article, it was expected that more small and large businesses would participate in this payment method.

However, the truth is that due to limited access to the application, technical errors, a lack of information for the public and guarantees on losses for companies, the application did not take off as originally hoped. Even the far more numerous informal vendors rejected payment in Bitcoin. The reasons expressed were uncertainty and the lack of clear information on how to use this technology. This is only logical. Outside the comforts and luxuries gained at the expense of the exploitation of the working class is the real economic situation faced by workers. These workers do not see the pittance of an income that they receive as a game. Rather they see it as part of the established capitalist system.

The large multinational corporations such as McDonalds chose to receive payments in Bitcoin from the first day of the law, yet it resorted to another method of Bitcoin transactions without using the ‘Chivo Wallet’. The alternative payment method it uses is Lightning Network, which works without the need for its own node – nor a security platform that manages funds – that is to say, a private company created to handle Bitcoin, like ‘Chivo SA de C.V’. Users thus have full control over Bitcoin without relying on anyone. This fact indicates that there was no constant and transparent communication with businesses, and that they chose to ensure income in another way.

The population have not been trained to use Bitcoin

The other plank necessary for Bitcoin to be successful in El Salvador – in addition to luck – is getting the general public on board. The working class, in a favourable situation for the ruling party, would have to accept and manage their incomes and expenses through Bitcoin. Yet, in light of El Salvador’s historical technological underdevelopment (which will not end by decree nor through the use of Bitcoin), it is simply the case that the population is not trained to incorporate this technology into their everyday lives.

The reality, outside of media bubbles and capitalist speculation fantasies, is a precarious economic situation for the majority of the population. This will be a lesson for the masses who, in not seeing demagogic promises fulfilled, will demand with more force a transformation in the way its government is run.

The limits of technology under capitalism

Technology has played an important and progressive role in history: from primitive cave dwellings to the moon landing. All of this, though achieved through interpersonal and intergenerational human cooperation, has been due to the social division of labour into classes, aimed at guaranteeing the continued existence of the ruling classes – from slave society to our current bourgeoisie.

The answer to this inequality, reproduced by the private appropriation of technology by the bourgeoisie, is for the working class to take over the reins of its destiny. It must expropriate this technology from the private ownership of the capitalist, and with this guarantee a dignified life for all humanity – for people; not for profit. The world is moving towards the information age, in fact, the world’s largest companies mine information and/or data as their main asset, which, processed with computing technologies, are now a vital tool for decision making and strategising. This is true at least of real data, not speculation.

Information and the associated technologies are therefore a source of knowledge, providing a useful tool to change the world for those who possess it and know how to make use of it. To emancipate the working class, it is necessary to take advantage of this technology and to democratise it for the whole of society. The search for liberation through technology within the capitalist system, however, will forever be a utopia.

Survey reveals massive rejection of Bitcoin among Salvadorans

By Xenia Barrera – Bloque Popular Juvenil

On Thursday, 2 September, the results of a survey carried out between 13-21 August this year by the University Institute of Public Opinion (IUDOP) were released. The data very clearly revealed the opinion of Salvadorans regarding the implementation of the Bitcoin Law, which came into effect on 7 September.

Read the original in Spanish here |

In the early morning of 9 June, the Legislative Assembly approved the Bitcoin Law without any public consultation. The legislators argued that making Bitcoin legal tender would create employment opportunities, promote genuine financial inclusion, and generate economic dynamism.

The Bukele administration has since tried to present the measure as visionary, futuristic, and cutting edge. He has tried to convince the population of the wonderful benefits of Bitcoin, of how this puts El Salvador in an advantageous position, ahead of the rest of the world. But all his propaganda has fallen on deaf ears. According to the IUDOP survey, 7 out of 10 Salvadorans believe that legislators should revoke the Bitcoin Law and have little or no confidence in the cryptocurrency.

Why is there such a massive rejection?

This hugely unpopular policy has been met with major opposition from the masses / Image: BPJ

The Bitcoin Law, approved summarily and without consulting the general public, created an environment of uncertainty, drawing parallels with the way the incorporation of the dollar was approved exactly twenty years ago.

One of the reasons for this mass rejection is a lack of clarity as to what Bitcoin actually is. According to the same survey, 9 out of 10 people have a distorted idea or do not know what cryptocurrency consists of. This lack of clarity has caused a rise in scepticism and rejection among the population at large, and it’s no wonder: the technology behind the use of Bitcoin is very complex and, in a country like El Salvador, with high levels of digital illiteracy, it is no surprise the population are unprepared to use it in their day to day lives.

This lack of clarity makes people easy targets for scams and digital theft, something which is known to be very common in the world of cryptocurrencies. Since the announcement and approval of the law, the government has done little or nothing to educate the population, and they have limited themselves to appealing to the people to trust that it is a good measure because the president says so.

On the other hand, although President Bukele has insisted on the freedom to use or not use Bitcoin as people choose, article 7 of the law directly conflicts with his statement, stating: every economic agent must accept Bitcoin as a form of payment when it is offered to them by someone who purchases goods or services. On this point, 95.9% of those surveyed think that the use of the cryptocurrency should be voluntary. In addition, 6 out of 10 agree that no public money should be spent to kickstart this project. However, to date, the government has planned to invest about $205 million to kickstart Bitcoin’s operation in the country, more than double the amount allocated to the budget of the University of El Salvador each year.

This is the first of Nayib Bukele’s proposals that is being rejected by the people. He knows it and his legislators know it too, but they will not back down on the new law, not just because they do not genuinely care about the interests of the population, but because this is a desperate gamble on the part of the government in the face of a financial crisis and a lack of liquidity. This casino gamble will only benefit the powerful and their puppets in the state. In the face of this, the generalised rejection of the Bitcoin Law by the people is positive, but we must organise this discontent and demand the law’s repeal through struggle on the streets.

On the increase in prices of basic goods

One of the greatest scourges that the working class has suffered in recent months has been the increase in the prices of basic goods. In June of this year, inflation reached 3%, – the highest it has been since 2013. 8 out of 10 respondents to a survey answered that the main expense in their household is the purchase of food or the payment of bills for basic services, in which they have noticed increasing prices in the last three months.

Almost a third of those surveyed (32.4%) believe that their economic conditions will be worse at the end of this year and almost half (45.7%) say that their situation will neither improve nor worsen. This is despite a recent $60 increase in the minimum wage. Yet 7 out of 10 people say that this increase does not translate into any significant improvement in living conditions.

A decent job with a salary commensurate with the cost of living has historically been one of the most urgent demands of the Salvadoran working class. After two years, the government of Nayib Bukele has shown itself incapable of satisfying this most essential question. The population can feel it in their daily lives. There is no propaganda powerful enough to hide this increasingly desperate situation.

Legislators at the service of Bukele and not the people

The IUDOP also asked respondents for their opinions about certain statements regarding the current Legislative Assembly. 60% of the Salvadoran population said they agree with the statement, “The majority of legislators in the current Legislative Assembly work more for the interests of their political party, than for the interests of the population.” Meanwhile, 96% agree or strongly agree that, “It is necessary for members of the Legislative Assembly to study the laws in depth and carefully before approving them.”

The actions of members of Bancada Cyan, Bukele’s party group in the Assembly, have been dictated by Bukele from the office of the presidency. They have no ideas of their own and everything they state is coldly calculated in advance by their advisers. In recent months, through the special commissions that have been created, these legislators have shown their total servility. Although they constantly preach the idea that they represent the people, what they really represent are the interests of the regime. The masses have given them an average approval rating of 6.27. This reflects the fact that, despite what might look deceptively like mass support for their actions on social media, the masses are casting a critical eye on the Assembly delegates and they are not all happy with their decisions.

It is a matter of time before this discontent becomes generalised. The reactionary government of Nayib Bukele is incapable of lifting Salvadorans out of misery and exploitation. As the honeymoon phase of his government passes, the population are beginning to become aware that nothing has changed. We will see an increasing number of coordinated actions placing demands on this government. More and more sections of the population will join in the fight. We must therefore arm ourselves with an optimistic and revolutionary perspective, and organise to play a decisive role in the struggle to build a better future.