Popular with college students, tech-savvy libertarians and dark web drug smugglers, with undoubtedly some of these groups overlapping, Bitcoin’s storied history as the first and foremost cryptocurrency started a new chapter when El Salvador recently adopted it as the official currency alongside the U.S. dollar. The first country to do so, El Salvador’s experiment with Bitcoin could shape attitudes towards cryptocurrency the world over. That being said, the move is, frankly, a horrible idea.
Salvadorans can access their Bitcoin and instantly exchange it with U.S. dollars at the market rate through an app called Chivo. In a country where only 34% of the population use the internet, the adoption of Bitcoin as an online currency only really affects city dwellers with access to the internet — and only those that can afford to purchase a smartphone. The fact that many people aren’t able to participate in the Bitcoin program, however, might be a good thing for their pocketbooks.
Bitcoin is famously unstable — that’s kind of the point. With rapid and heavy price fluctuations since it first made the jump from $0.0008 to $0.08 in 2010, Bitcoin investors ride the speculation and uncertainty in hopes of making millions. Additionally, over 60% of college students and graduates believe bitcoin is a good long-term investment, including students at the University of Mississippi. The recent irregularities in the stock market, such as the explosion of Gamestop stock and the rise of Dogecoin, were fueled by college students all across the country.
Pursuing the wild ups and downs of crypto is fine for those with disposable income to do so. In El Salvador, however — one of the poorest countries in South America — the volatility that can make millionaires is more likely to wipe out the savings of millions of Salvadorians. While the Chivo app allows users to convert their coin to USD, if they miss a downturn in the market, all of their money could go down the drain.
With the goal to generate sustainable economic growth and encourage investment, national currencies should be stable and reliable — not tied directly to one of the most historically volatile economic platforms in the history of the world.
Part of the appeal of Bitcoin is that it is not regulated by an economic body. This means no one can set interest rates or control supply, which are tactics used by banks and treasuries to maintain the stability of the currency. El Salvador was already outsourcing this work to the U.S. Treasury, who can reliably navigate the markets and stabilize the U.S. dollar.
There is no captain at the helm of the Bitcoin ship, however, and with no one to stabilize and manage the currency, domestic prices for goods could fluctuate dangerously, endangering the wellbeing of millions of Salvadorians.
Adopting Bitcoin as the national currency of El Salvador will prove to be a dangerous mistake, staking the lives and livelihoods of an entire nation on the whims of crypto investors and Elon Musk tweets. Nations of the world, I beg you: don’t make Bitcoin your national currency. I, for one, would like to not be forced to care what Elon Musk says on Twitter.
Hal Fox is a sophomore majoring in Chinese and international studies from Robert, Louisiana.