Perpetrating the Ponzi Scheme: Protests in El Salvador Against Bitcoin as Legal Tender

On September 5, hundreds of protesters gathered beneath the Monument to the Constitution in El Salvador’s capital, San Salvador, holding hand-made signs that said “no to Bitcoin” and expressing their disappointment in “Dictator Bukele.” The angry citizens, mostly in their twenties, took turns using a microphone to condemn President Nayib Bukele’s decision to adopt Bitcoin as legal tender of the Central American country. Almost all of the demonstrators wore masks—not necessarily to prevent the spread of COVID-19 but rather to avoid identification by the police. On September 7, thousands of people once again took to the streets of San Salvador to protest the adoption of Bitcoin as the country’s currency alongside the U.S. dollar amid the initial efforts to support the digital currency.

Bukele’s party “Nuevas Ideas” (New Ideas) replaced the five members of the Constitutional Chamber and the independent attorney general shortly after coming to power this February. Moreover, they also abolished the constitutional ban on consecutive presidential reelection, giving Bukele an opportunity for reelection in 2024 and causing some citizens to lose faith in the president. Over recent months, Bukele has been branded by many as an authoritarian leader trying to undermine democratic stability and judicial stability in the country.

The turmoil started earlier this year on June 8, when El Salvador made the historical decision to become the first country to adopt the Bitcoin cryptocurrency as their legal tender alongside the U.S. dollar. On June 8, Congress approved the president’s proposal with 62 out of 84 votes. Bitcoin was implemented as the national currency 90 days after. This meant that every business is now required by law to accept Bitcoin as legal tender in exchange for goods and services unless they  are unable to provide the required technology for the transaction. Bukele noted in a tweet that “[Bitcoin] will bring financial inclusion, investment, tourism, innovation and economic development for our country.”

In the meantime, protests have continued—on September 15, the 200th anniversary of  the country’s independence, approximately 15,000 demonstrators came to the streets to express their dissatisfaction with Bitcoin and Bukele.

Despite all this, the populace has varying opinions on the topic. For 26-year-old Daniel Hercules,  the cryptocurrency is an opportunity that he is both excited and a little concerned about. Others, such as 70-year-old Jeanette Sandoval, are more conservative in their views and wary of Bitcoin’s fluctuating value. But Salvadorans have one universal fear: the fear that Bitcoin may lead to higher inflation rates for the already impoverished country.

By: Ani Bayramyan