El Salvador - Bukele is dividing the Bitcoin community over his anti-democratic tendencies and attitude toward civil rights
And some companies are taking advantage of it to offer Salvadorans what Chivo failed at doing.
If you judge president of El Salvador Nayib Bukele by his thinking on technology, the leader of the world’s first Bitcoin nation state looks savvy, forward-thinking and aware of the pace of technological change afoot. But judged by his attitude toward democratic institutions, the picture is more complicated.
Bukele’s attitude toward democracy is the subject of a recent Twitter Spaces hosted by the Human Rights Foundation, a pro-Bitcoin organization. What became clear following the 30 July podcast is that Bitcoin’s community is splitting into two over Bukele, Bitcoin and rights.
Bitcoiners, often defined by their ethics of Maximalism, a belief that Bitcoin is sacrosanct and the only blockchain worth building on, threw stones at HRF’s Alex Gladstein over his critiques of Bukele’s anti-democratic moves. Some think he is missing the point. Others say Bukele is antithetical to everything Bitcoin stands for.
The argument against Gladstein’s talk, like this one offered by Stacy Herbert, involve supporters insisting that Salvadorans are now “free” after Bukele’s three years in office. Gladstein, a Bukele skeptic, responded that the adoption of Chivo technology does not mean that Salvadorans are more free if the platform is a command-and-control database dominated by the executive branch.
There’s a bigger picture here. Ever since nation states like El Salvador have begun to flirt with policy takes on Bitcoin and other blockchains, there is an emerging conversation about just how much authoritarianism and human rights abuse a Bitcoin company will tolerate in exchange for a jurisdiction in which the company can deploy its Bitcoin wallet, app or platform. In some ways, it is the same conversation about how much amnesty the international system should give a country on rights when it dominates petroleum reserves.
The paradox with El Salvador is that for all the argument and debate over Bukele and rights, Chivo use is faltering and there does not appear to be a significant Bitcoin company rolling out lightning network infrastructure for Salvadorans in its place. At least not yet, and by now Chivo was supposed to bank the unbanked and free Salvadorans from the predatory practices surrounding traditional remittance and other transactions.
Meanwhile, a neobank called n1co is challenging Bukele’s Chivo wallet with existing, tested technology. The fintech is using QR technology and US Dollar-based banking infrastructure to onboard Salvadorans who are cut off from the banking system and want a simple, familiar way to become banked.
That is good for Salvadorans, but bad for Bitcoin infrastructure. If a fintech like n1co can show that for all the hype of the Lightning Network, their classic fintech proposal works better in a country like Salvador, then it might lead investors to conclude that traditional fintech is a better bet than LN wallets in Latin American markets. Likewise, a president who disrespects institutions and rights is likely to raise the alarm amongst many institutions and funds that would otherwise be keen on solving the remittance problem.
One thing is clear: Bitcoin and LN investors want a Bitcoin country in Latin America. They would do well to find one where the institutional framework is strong and security follows from the law, not a man who pretends to stand above it.