Nayib speaking on conference

Nayib Bukele’s BTC boondoggle: El Salvador experiment an epic fail

El Salvador’s president couldn’t make this year’s big BTC party in Miami because he’s (a) too busy suppressing free speech at home and (b) too embarrassed that none of his BTC projects have panned out.

As this year’s BTC maximalist conference in Miami got underway, El Salvador’s President Nayib Bukele released a statement saying he’d made “the hard decision of cancelling my participation due to unforeseen circumstances in my home country that require my full time presence.” Bukele said the Miami shindig was “one of the biggest celebrations of the power of freedom” but he was currently preoccupied with shoring up “another flank in the battle for freedom.”

Last month, Bukele declared a ‘state of exception’ after El Salvador was rocked by 76 gang-related homicides in just two days. Bukele’s new rules extended the duration that arrested individuals could be held without charge, eliminated the two-year limit for pre-trial detention, allowed trials to be held in absentia and offered anonymity to judges who preside over trials.

Bukele followed that up with Penal Code reforms that threaten up to 15 years in prison for journalists/media who “reproduce and transmit messages from or presumably from gangs that could generate uneasiness or panic in the population.” The move follows last year’s revelations that El Salvador’s intelligence services had planted Pegasus spyware on the phones of local media figures.

El Faro, the digital newspaper that last year revealed the Bukele government’s secret negotiations with leaders of gangs (including MS-13), temporarily replaced its home page with a ‘No to Censorship’ op-ed that called the revised Penal Code “a gag on freedom of the press and freedom of expression.” El Faro said “in a democracy it is not the power that decides what is published and what is not,” and warned that El Salvador cannot allow its hard-won freedoms to be “taken from us by a regime that seeks to keep citizens in the dark.”

Not cool, Max

The day after Bukele released his Miami statement, BTC maxi and carnival barker Max Keiser appeared on the BTC conference stage waving an El Salvadoran flag. Keiser—who spent most of March deleting hundreds of tweets in which he insisted reports of Russia preparing to invade Ukraine were a false-flag disinformation campaign—claimed in a March 30 tweet that the International Monetary Fund (IMF) had ‘sponsored’ El Salvador’s gang murders. A few days later, Keiser continued his would-be Jedi mind tricks by claiming that El Salvador’s murder rate was “plunging.”

Bukele apologists like Keiser, Blockstream and the crooks behind the Tether ‘stablecoin’ fraud all fell in love with the ‘millennial cool’ dictator at the 2021 Miami BTC love-in, thanks to Bukele’s surprise announcement that BTC would become legal tender in El Salvador. The country promptly rolled out a BTC wallet called ‘Chivo’ (‘Cool’) and required all businesses to accept BTC as payment, despite significant local opposition to this project from local residents.

Predictably, the BTC experiment almost immediately went off the rails. Adoption was minimal, the Chivo wallet was a security nightmare and the payment network was exposed as a kludge of a kludge that has about as much to do with Bitcoin as Keiser does with reality.

These setbacks were dismissed out of hand by BTC maxis, who tend to confine their El Salvadoran travels to the so-called ‘Bitcoin Beach’ foreign tourist zone in which seldom is heard a discouraging word about their dodgy tech. So imagine their teeth-gnashing fury when Bloomberg reporter Michael McDonald chose the same week as the Miami conference to release his report on The Infuriating Reality of Traveling with Bitcoin in the World’s Crypto Capital.

Take my damn money

This February, McDonald made a five-day trek across El Salvador in which he attempted to use only BTC to pay for goods and services. Straight off the plane, things get off on the wrong foot when McDonald is told his only options for paying the customs entry fee are “cash or credit” because passport control’s Chivo point-of-sale device isn’t working.

McDonald finds no takers for his BTC among the airport cabbies, and in the hour that it takes him to get to his hotel he finds that the value of the BTC he loaded onto his phone pre-trip has declined by 2%. He has slightly better luck checking into his hotel, although it takes 24 hours for the BTC transaction to go through.

The next day, McDonald attempts to use his Chivo wallet at a restaurant but two attempts in quick succession fail to go through, forcing him to pay the tab with his Visa card. It later turns out that the BTC transactions did go through a day or so later, so he paid three times for the same bill. Fortunately, the restaurant eventually returns the funds to him, minus the $4 fees he paid for these transactions.

McDonald’s initial attempt to withdraw cash from a Chivo ATM is successful, but this later sets him up for a fall when he attempts to use another ATM at the airport. That transaction goes through and the BTC leaves his wallet, but the ATM never dispenses the $40 he was owed.

McDonald ultimately found that only 10 of the 50 vendors he interacted with were willing to take his BTC, and only four of those 10 transactions were what he called ‘seamless.’ That experience mirrors a recent Chamber of Commerce survey, which found only 14% of some 337 El Salvadoran businesses had done any BTC transactions since last September.

Overall, McDonald had this to say about the $485 he’d managed to spend on BTC transactions in El Salvador: “I’d paid $40 in Bitcoin fees, such as levies for transferring the currency between Coinbase and my digital wallet. My Visa, by contrast, is paying me—$20 in cash-back rewards.”

Putting the dick in dictator

Getting back to Bukele’s no-show apology to the Miami conference delegates, El Presidenté appeared to be trying to bolster Kaiser’s IMF conspiracy theories by saying that “hopefully we’ll be able to learn soon why this had to happen this way.”

We all know why ‘this’ had to happen. Authoritarians traditionally offer their subjects an implicit guarantee of public order in exchange for robbing them of nearly all their other rights and freedoms. With carnage occurring on El Salvador’s streets, Bukele was falling short on his end of this bargain. It was time for the velvet glove to come off his iron fist.

But Bukele had other motivations for skipping the Miami stage, including the fact that none of his “crypto” schemes have so far delivered on his lofty promises. As detailed above, the ‘legal tender’ gambit is a joke, the inane Bitcoin City project and its accompanying U.S.$1b bond issue have been put on hold for still-murky reasons, while the 1,800-odd BTC that Bukele purchased—with taxpayers’ money—over the past seven months are each currently worth around $5,000 less than the average $48,000 Bukele—aka the taxpayers—paid for them.

In other words, Bukele is the perfect poster boy for the BTC ecosystem. BTC has failed both as a payments network and as a store of value, yet merely pointing this out is enough to unleash a flurry of rabid responses from both the BTC maxis sporting laser eyes in their social media avatars and the troll-bot armies they control on Twitter and other social networks. Like Bukele, they don’t want the world discussing their failures.

Kaiser and his ilk probably feel that they don’t dare stop their frenzied gaslighting. Despite this year’s Miami confab being jampacked with breathless announcements of new tie-ups and inroads into traditional payment channels, the BTC token’s value somehow closed the week down more than 8%. It seems that, absent a Viagra-worthy pump from the Tether money-printer, BTC is downright flaccid.

In the end, BTC can’t offer anyone a golden future—with the possible exception of the hype-men desperately trying to introduce new fiat exit liquidity—because BTC lacks utility. Artificially constrained block-sizes, glacial throughput and high transaction fees have left BTC incapable of performing as the peer-to-peer electronic cash that Satoshi Nakamoto detailed in his 2008 Bitcoin white paper.

Those who haven’t drunk the Miami Kool-Aid would do well to investigate the Bitcoin SV (BSV) blockchain, which remains true to Satoshi’s vision through ultra-low transaction fees and immutable data storage. Moreover, BSV’s commitment to constantly expanding the size of individual blocks means more and more transactions can be crammed into those blocks, making BSV the most energy-efficient enterprise blockchain.

As a bonus, BSV doesn’t require you to publicly smooch the posterior of a backwards baseball cap-wearing authoritarian who marched armed soldiers into parliament to ensure passage of a bill that gave those same soldiers (and police) more tools with which to repress the citizens of El Salvador. Remember that the next time some BTC maxi dares to make some proprietary claim on the word ‘freedom.’

Follow CoinGeek’s Crypto Crime Cartel series, which delves into the stream of groups—a from BitMEX to BinanceBitcoin.comBlockstreamShapeShiftCoinbaseRipple, EthereumFTX and Tether—who have co-opted the digital asset revolution and turned the industry into a minefield for naïve (and even experienced) players in the market.

New to Bitcoin? Check out CoinGeek’s Bitcoin for Beginners section, the ultimate resource guide to learn more about Bitcoin—as originally envisioned by Satoshi Nakamoto—and blockchain.

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