San Salvador, El Salvador:

Napoleon Osorio is proud of being the first taxi driver to have accepted payment in bitcoin in the first country in the world to make the cryptocurrency legal tender: El Salvador.

He credits President Nayib Bukele’s decision to bank on bitcoin three years ago with changing his life.

“Before I was unemployed… and now I have my own business,” said the 39-year-old businessman, who uses an app to charge for rides in bitcoin and now runs his own car rental company.

Three years ago the leader of the Central American nation took a huge gamble when he put bitcoin into legal circulation in a bid to revitalize El Salvador’s dollarized, remittance-reliant economy.

He invested hundreds of millions of dollars of taxpayer money in the cryptocurrency, despite warnings about volatility risks from global institutions.

Osorio credited the US founder of the NGO My First Bitcoin, John Dennehy, with encouraging him to accept payment in the cryptocurrency.

He now has 21 drivers working for his Bit-Driver brand and has made enough profit from the currency’s rise to be able to buy four rental vehicles.

A divorced father of two teenagers, he also no longer struggles to pay for their education.

Launching bitcoin as legal tender on September 7, 2021, Bukele said he wanted to bring the 70 percent of Salvadorans who do not use banks into the financial system and promptly began plowing public money in cryptocurrencies.

To spur Salvadorans to use bitcoin he created the Chivo Wallet app for sending and receiving bitcoin free of charge and gave $30 to each new user.

His grand ambitions for bitcoin fell foul of the International Monetary Fund (IMF), which hesitated to grant El Salvador a $1.3 billion loan because of its official use of the cryptocurrency.

In August, however, the IMF announced a preliminary loan agreement with El Salvador, while saying it needed to mitigate “potential risks.”

– Offered as ‘option’ –

While Osorio has grown relatively wealthy with bitcoin, a study by the University Institute for Public Opinion showed that 88 percent of Salvadorans had yet to use it.

“From the beginning… it was clear that it was clearly an ill-advised measure that the population rejected,” the director of the institute, Laura Andrade, told AFP.

One-quarter of Salvadoran GDP comes from remittances sent home by family members, mostly from the United States.

But in 2023 only one percent of the transfers were made in cryptocurrencies.

In an interview with Time magazine in August, Bukele acknowledged that while “you can go to a McDonald’s, a supermarket, or a hotel and pay with Bitcoin” it had “not had the widespread adoption we hoped for.”

He added that “the positive aspect is that it is voluntary; we have never forced anyone to adopt it. We offered it as an option, and those who chose to use it have benefited from the rise in Bitcoin.”

He also confirmed that he had around $400 million in bitcoin that is kept in a public “cold storage wallet” — a way of storing bitcoin offline.

Bitcoin’s fortunes have been mixed.

This week it was trading at around $52,000, down from a peak of $73,616 on March 13. In November 2022 it fell as low as $16,189.

Independent economist Cesar Villalona told AFP that Bukele himself had hobbled bitcoin’s take-up by stripping it of the usual functions of a currency.

“Bukele… said: there will be no salary in bitcoin, there will be no pensions in bitcoin, there will be no savings in bitcoin and there will be no price in bitcoin, and in so doing took away the three functions of money,” Villalona said.

Luis Contreras, an instructor at My First Bitcoin, told AFP many Salvadorans were simply afraid of making the switch.

The organization has taken cryptocurrencies into public schools, teaching around 35,000 students to use bitcoin so far.

Contreras says the hardest thing about training people on bitcoin “is their fear of new things, which creates a fear of technology” as well as “the fear of moving from a classic currency in the current economy to one that is totally digital and decentralized.”

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)

El Salvador’s Congress, which is controlled by President Nayib Bukele’s New Ideas party, on April 29 approved a change to an article of the Constitution to facilitate larger constitutional reforms without having to wait until after the election of a new legislature.

The move further consolidates power in the hands of Mr. Bukele and his party, with some critics saying it opens a possible path for the leader to stay in power.

Previously, constitutional reforms had to be proposed and approved in one legislature, then ratified in the subsequent Congress following elections. Now, reforms can be swept through with just the vote of three quarters of legislators.

“This is a shot to the democracy of our country. The only thing they are demonstrating is the petty interests and ambition to maintain and not let go of power,” said Rosa Romero, of the right-wing Nationalist Republican Alliance (ARENA).

Mr. Bukele, a populist strongman, has already made moves that critics say endanger the Central American nation’s fragile democracy.

In addition to going after critics and locking up 1% of his country’s population in his gang crackdown, the leader last year also approved reforms slashing the number of seats in Congress, effectively weighing upcoming elections in his party’s favor.

In February, highly popular Mr. Bukele easily won a second term in his country’s presidential elections, despite the country’s constitution prohibiting re-election. His party also won a super majority in Congress, effectively allowing Bukele to rule as he may.

The constitutional reform would only further allow the leader to push through his policies, including potentially carrying out more reforms to stay in power.

In an interview with the Associated Press in January, Mr. Bukele’s Vice President didn’t discard the possibility of the leader seeking a third term if the constitution was changed after repeatedly dodging questions by reporters.

The April 29 reform quickly sparked outrage among critics and watchdogs, including Claudia Ortiz, a legislator under the VAMOS party who voted against the reform.

“Do they know what they are doing? They are handing themselves power. Aren’t they ashamed? I want to tell Salvadorans not to give up,” Mr. Ortiz said.

Meanwhile, Citizen Action, an non-governmental organization said in a statement on Monday that “New Ideas is eliminating another political counterweight.”

The measure they eliminated “aimed to preserve the Constitution and protect the people from abuses of temporary legislative majorities,” the statement read.