Nayib Bukele is a Maverick and self-professed CEO of El Salvador.
He bleeds Bitcoin.
His image resembles a cartel boss, with a wardrobe that consists of skinny jeans, baseball caps and aviator sunglass.
He’s no ordinary President. Aware of his image, he once referred to himself as the “world’s coolest dictator”.
The now 43rd president and arguably most popular the country has ever had couldn’t be any less presidential.
Bukele gained popularity, winning the election with 53% of the votes by waging war against the country’s violent crime rates and the corruption of the opposition parties.
El Salvador is home to a tiny population of 6.4 Million residents in Central America, all now riding the volatility wave of cryptocurrency.
Their authoritarian-style leader, a former Yamaha Motors dealer and Bitcoin maximalist, wanted to support their unbanked residents, who comprise 70% of the population.
El Salvador holds 2,381 Bitcoin at a cost price of $43,357, according to data from Buy Bitcoin Worldwide.
There is no on-chain record confirming the purchases the Bitcoin mad president has made, so the information is updated off the back of the Bukele’s Tweets.
So it still needs to be 100% verified.
Bukele announced that El Salvador would begin buying one Bitcoin every day. This announcement came right after the FTX capitulation.
FTX was a Crypto trading platform that encountered the Crypto equivalent of a bank run because of the company’s nefarious activities of trading customer deposits.
There was no money in the pot to pay customers back.
It led to FTX going bankrupt and ultimately crashing the entire crypto market.
“FTX is the opposite of Bitcoin’s protocol created precisely to prevent Ponzi schemes, and bank runs, Enron’s, WorldCom’s, Bernie Madoff’s, Sam Bankman-Fried’s bailouts and wealth reassignments.
Some understand it, and some do not yet.
We’re still early.
He later posted this Tweet.
Bukele’s recent announcement, which always comes from his Twitter account, comes four months after he ordered the purchase of 80 Bitcoins at $19,000 a coin.
At the time, the country’s investment in Bitcoin was down by nearly $60 million.
El Salvador has reportedly spent $103.23 million on its purchases, with Bitcoin trading at around $16,700 — the value of their digital portfolio sits at $39,751,927, implying more than $64 million in losses.
Bukele has allegedly never sold any of its crypto holdings, and he has never shared actual wallet addresses associated with the purchases. Still, he insists patience is the most important thing about investing in Bitcoin.
Is There Any Logic in Spending His Country’s Reserves on Bitcoin?
At one point, 70% of El Salvador didn’t have a bank account.
If you look past Bukele’s seemingly gung-ho leadership, he does have an altruistic reason for making Bitcoin a legal tender.
He wants to provide his people with an economic tool to help build a store of value and reduce the country’s 200 Million Dollar remittance bill.
These are banking fees for transactions. Most of the country is unbanked because it costs them fees to withdraw money.
A dynamic of low-paid workers is they receive weekly pay, creating more transaction output and increasing fees.
It makes logical sense when the President’s theatrics don’t blind you.
Remittances comprise a large portion of the country’s expenses, totalling roughly $5.9 billion, 23% of their output.
Anything with the potential to lower the cost could be of significant benefit to the country’s economy.
The country’s unbanked population is staggering.
Data from Statista show the percentage of people who have a bank account or a mobile money account — there has been a substantial increase in Mobile Money Accounts.
Bank Account = Blue
Mobile Money Account = Black
According to Bukele, three million people have downloaded the country’s Chivo Bitcoin Wallet, which makes up 46% of the population.
In contrast to 2021, only 36% of El Salvador’s population had bank accounts.
El Salvador Currently Holds 2,381 Bitcoin, and It Could Go Down in History.
It’s unclear if the country has sold any Bitcoin, but according to Bukele’s Twitter, he keeps buying the dip.
Given recent events in crypto, it keeps dipping.
And it’s completely unknown what the cascade effect the FTX bankruptcy will have on other cryptocurrency exchanges.
So dollar costing averaging into the digital currency is a risky bet.
I say this because the country would need to survive economically for the price of Bitcoin to recover.
Data confirms that creating a store of value does pull people out of poverty, but detractors argue that the move into Bitcoin is premature.
Countries like Kenya seemingly are overcoming their unbanked crisis.
An economy surfaced where village locals would sell, trade and store network minutes and data as a store of value.
The phone networks in Kenya realised that the unbanked population needed to create a safe store of value to build wealth and have a rainy day fund.
Kenyan mobile money account M-PESA doesn’t require a bank account and is used by 96% of their population.
194,000 Kenyans climbed out of extreme poverty through the ability to store value and create a rainy day fund by initially keeping and trading network minutes.
The app uses human agents who hang out in different locations throughout the country with cash and a mobile phone.
These human agents function like an ATM.
You go up to them and give them cash to get money deposited in your mobile money account or transfer money out of your account to get cash.
The availability of cash when you need it and a safe place to deposit it when you don’t is a big deal in a country with a flawed banking system.
While I believe in Bitcoin’s store value capabilities, spending the country’s reserves buying digital currency is as rogue as it comes.
Bukele could go down in history if there is a cascade effect of adoption during the next cycle and Salvadorians don’t become impatient with their leader.
I never see Bukele agreeing to sell his Bitcoin to make a profit, given his maximalist DNA.
We’ve also just seen almost five years of Bitcoin’s market cap wiped away through several events entirely out of everyone’s control.
While no one knows if El Salvador can hang on to its Bitcoin for five years through at least one inevitable recession, you have to agree it’s a bold move that could pay off.
Nayib Bukele could go down in history, and it can also be for all the wrong reasons.