Nayib Bukele and Bitcoin: A Match Made in El Salvador

When Nayib Bukele made Bitcoin legal tender in El Salvador in 2021, it sent shockwaves across the financial world. But who is Bukele beyond his Bitcoin advocacy? How did he rise to power, and why has he pushed so aggressively for crypto adoption? While some hail him as a visionary leader, others criticize his authoritarianregime. This article explores Bukele’s journey, his Bitcoin experiment, its impact on El Salvador, and the future of Bitcoin in the country.

Who is Nayib Bukele?

Early Life and Background

Nayib Armando Bukele Ortez was born on July 24, 1981, in San Salvador, El Salvador. His family has Palestinian roots, with his grandfather immigrating from Bethlehem in the early 20th century. Bukele’s father, Armando Bukele Kattán, was a well-known businessman and religious leader, respected for his involvement in media, pharmaceuticals, and various business ventures. Though raised in a Muslim family, Nayib Bukele has described himself as a believer in God but does not publicly affiliate with any particular religion.

From an early age, Bukele showed an interest in entrepreneurship. Instead of pursuing a political career immediately, he focused on business and media, running various companies linked to his family’s conglomerate. By his twenties, he was managing Obermet S.A. de C.V., a local advertising and marketing firm. This experience in branding and communications would later play a crucial role in his political rise.

Political Beginnings and Rise to Power

Bukele’s political career began in 2012, when he ran for mayor of Nuevo Cuscatlán, a small town in the San Salvador department. Representing the left-wing Farabundo Martí National Liberation Front (FMLN)—a former guerrilla group that became a major political party—he won the election and quickly gained attention for his progressive governance. His tenure focused on:

• Social programs, such as scholarships and housing assistance for low-income families.
• Infrastructure projects, improving roads, parks, and public spaces.
• Security measures, which led to a significant reduction in crime in the municipality.

His success in Nuevo Cuscatlán propelled him to a bigger stage. In 2015, he ran for mayor of San Salvador, the capital city, again under the FMLN. He won and implemented several modern urban projects, including:

• “San Salvador: A City for People”, aimed at revitalizing public spaces.
• Tech-driven governance, including digital initiatives to modernize city administration.
• Crackdowns on corruption within municipal contracts.

However, Bukele’s relationship with the FMLN soon soured. By 2017, the party expelled him after internal conflicts and allegations that he had insulted an FMLN leader. Bukele, however, claimed the party had become corrupt and resistant to change.

Founding Nuevas Ideas and the 2019 Presidential Election

After breaking with the FMLN, Bukele set his sights on the presidency. In 2018, he founded Nuevas Ideas (New Ideas), a centrist political movement that positioned itself as anti-establishment. However, since Nuevas Ideas was not formally registered at the time, he ran under the banner of the center-right Grand Alliance for National Unity (GANA) in the 2019 presidential election.

His campaign focused on three key promises:

1. Fighting corruption—criticizing the traditional political parties (FMLN and ARENA) for decades of mismanagement.
2. Reducing gang violence—implementing a “territorial control” plan to regain security in crime-ridden areas.
3. Modernizing El Salvador—using technology, foreign investment, and business-friendly policies to boost economic growth.

Bukele won the election with 53% of the vote, breaking the traditional two-party dominance in Salvadoran politics. His victory marked a generational shift, as he became the country’s youngest president at age 37.

Political Ideology and Leadership Style

Bukele presents himself as a pragmatic populist, combining elements of progressivism, conservatism, and strongman leadership. His ideology is difficult to categorize, but it includes:

• Pro-business policies: He supports foreign investment, tourism, and Bitcoin adoption.
• Tough-on-crime stance: His government has aggressively cracked down on gang violence, with mass arrests and strict security measures.
• Authoritarian tendencies: Critics accuse him of weakening democratic institutions by controlling the judiciary, pressuring lawmakers, and bypassing constitutional limits.

Despite concerns about his authoritarian approach, Bukele remains extremely popular, with approval ratings consistently above 70%. His ability to maintain support while pursuing controversial policies has made him one of the most influential leaders in Latin America today.

Bukele and Bitcoin: How It Started

Bukele’s interest in Bitcoin became public in 2021, but hints of his pro-crypto stance emerged earlier. He framed Bitcoin as a way for El Salvador to gain financial sovereignty, attract investment, and help citizens who rely on remittances from abroad.

Why Did Bukele Embrace Bitcoin?

Nayib Bukele’s decision to make El Salvador the first country in the world to adopt Bitcoin as legal tender was not just a financial experiment—it was a political and economic statement. Several key factors influenced this move:

1. Remittances and Financial Inclusion
   • Over 20% of El Salvador’s GDP comes from remittances sent by Salvadorans working abroad, primarily in the United States.
   • Traditional remittance services (like Western Union) charge high fees—sometimes up to 10% per transaction.
   • Bukele argued that Bitcoin’s low-cost transactions could help Salvadorans receive more of their earnings.
2. Attracting Foreign Investment and Tourism
   • By branding El Salvador as a crypto-friendly nation, Bukele sought to attract Bitcoin entrepreneurs, tech companies, and international investors.
   • The government promoted “Bitcoin Beach”, an experimental circular economy in El Zonte, to showcase BTC’s potential in everyday transactions.
3. Challenging the Traditional Financial System
   • Bukele has been openly critical of global financial institutions like the IMF and World Bank, viewing them as tools of economic colonialism.
   • By embracing Bitcoin, he positioned El Salvador as a financially independent nation, less reliant on foreign debt and economic policies dictated by powerful institutions.
4. Bukele’s Personal Branding
   • Bukele is a master of social media and understands the power of marketing.
   • His Bitcoin announcement at the 2021 Bitcoin Conference in Miami went viral, instantly making El Salvador the center of the crypto world.
   • By associating himself with Bitcoin maximalists, he gained a loyal base of international supporters.

How Bitcoin Became Legal Tender in El Salvador

On September 7, 2021, El Salvador officially made Bitcoin legal tender alongside the U.S. dollar. The move allowed citizens to use BTC for transactions, pay taxes in Bitcoin, and required businesses to accept it (unless they lacked the technology). The government also began purchasing Bitcoin for national reserves, accumulating thousands of BTC over time.

Bukele positioned this as a revolutionary step for financial inclusion, claiming it would lower remittance fees and attract foreign investment. However, the rollout was met with resistance from local businesses and concerns from international organizations like the IMF.

How Bitcoin Changed Life for Locals, Businesses and Tourists

1. Impact on Locals: A New Financial Reality

a) Financial Inclusion for the Unbanked

Before Bitcoin adoption, 70% of Salvadorans had no access to traditional banking services. Many relied on cash-based transactions and informal financial networks. The government’s solution was the Chivo Wallet, a state-backed Bitcoin wallet that aimed to provide easy access to digital payments.

• $30 worth of free Bitcoin was given to every citizen who signed up, encouraging mass adoption.
• Users could send and receive Bitcoin, convert it to USD instantly, and withdraw cash at Chivo ATMs.

However, the implementation faced major issues, including:

• Technical glitches: Many users reported failed transactions and disappearing funds.
• Lack of education: A significant portion of the population was unfamiliar with how Bitcoin worked, leading to low adoption rates.
• Volatility concerns: Many Salvadorans, especially those living paycheck to paycheck, feared losing money due to Bitcoin’s price fluctuations.

As a result, while some Salvadorans embraced Bitcoin for transactions, many cashed out their $30 bonus and never used it again.

b) Remittances: A Mixed Bag

One of Bukele’s main arguments for Bitcoin adoption was to reduce the cost of remittances, which account for over 20% of El Salvador’s GDP. Traditionally, remittance services like Western Union and MoneyGram charge high fees, often 5-10% per transaction.

Bitcoin’s low-cost, borderless transactions were supposed to revolutionize remittances, but uptake has been slower than expected. Reasons include:

• Preference for traditional methods: Many Salvadorans still trust cash-based or traditional bank transfers.
• Limited infrastructure: While Bitcoin ATMs exist, their availability is inconsistent, and some areas still lack reliable internet access.
• Volatility concerns: Many recipients prefer USD over Bitcoin, given the unpredictable nature of cryptocurrency.

A 2022 study showed that less than 2% of remittances were being sent via Bitcoin, suggesting that it has yet to replace traditional methods in a significant way.

c) Day-to-Day Transactions: Businesses Accepting Bitcoin?

Under the Bitcoin Law, businesses are required to accept Bitcoin if they have the technological capability. However, real-world adoption varies:

• Large franchises like McDonald’s, Starbucks, and Pizza Hut accept Bitcoin, but reports suggest they often convert it immediately to USD rather than holding it.
• Small businesses are more hesitant due to the volatility and additional learning curve. Many prefer sticking to cash or USD transactions.
• In urban areas, Bitcoin adoption is more noticeable, but in rural communities, it remains scarce.

According to a 2023 survey, only about 20% of businesses reported using Bitcoin regularly, with most preferring USD. While the law mandates Bitcoin acceptance, enforcement is lax, and many businesses quietly refuse to accept it.

2. Impact on Businesses: The Bitcoin Experiment

a) Volatility and Cash Flow Issues

For businesses, Bitcoin’s high volatility is a double-edged sword:

• When Bitcoin’s price surges, businesses holding BTC make a profit.
• When Bitcoin crashes, businesses lose money and struggle to manage cash flow.

To avoid losses, many businesses convert BTC to USD immediately. However, this defeats the purpose of Bitcoin adoption, as businesses do not actually use Bitcoin as a currency but rather as a conversion tool.

b) Bitcoin Adoption Among Entrepreneurs

Despite skepticism among traditional businesses, some entrepreneurs and startups have embraced Bitcoin:

• Crypto-based businesses have flourished, with Bitcoin-themed cafés, Bitcoin-focused travel agencies, and even Bitcoin-friendly real estate ventures.
• Freelancers and digital entrepreneurs in El Salvador have benefited from borderless Bitcoin payments, avoiding traditional banking fees.

However, the overall business adoption rate remains low, with most companies preferring to operate in USD.

3. Impact on Tourism: A Surprising Boost

a) Bitcoin Tourism – A New Attraction

One of the biggest unexpected benefits of Bitcoin adoption has been a boom in tourism. In 2022, tourism increased by 30%, with Bitcoin enthusiasts from around the world flocking to El Salvador.

Key attractions include:

• Bitcoin Beach (El Zonte): A coastal town where Bitcoin is widely accepted, making it a real-world crypto experiment.
• Crypto Conferences and Events: Bitcoin-related conferences have drawn thousands of international visitors.
• Bitcoin-friendly businesses: Many hotels, restaurants, and tour operators cater specifically to Bitcoin users.

Tourists visiting El Salvador for Bitcoin-related reasons helped offset economic struggles caused by the initial skepticism among locals.

b) El Salvador’s Global Reputation and Foreign Investment

While Bitcoin adoption faced internal resistance, it transformed El Salvador’s global image:

• Once known for gang violence and instability, El Salvador is now seen as a pioneer in financial innovation.
• The country has attracted foreign crypto investors and entrepreneurs, some of whom have relocated to El Salvador due to its crypto-friendly policies.
• Bukele has positioned El Salvador as a Bitcoin hub, promoting projects like Bitcoin Bonds and the futuristic Bitcoin City initiative.

4. Challenges and Criticism: Is It Working?

Despite some success stories, Bitcoin’s adoption in El Salvador has not been smooth. Key challenges include:

• Low adoption among locals: Most Salvadorans still prefer USD over BTC, leading to limited real-world usage.
• Technical and trust issues: The Chivo Wallet rollout faced numerous glitches, eroding trust in the system.
• Volatility risks: Businesses and individuals hesitate to hold BTC due to unpredictable price swings.
• IMF and financial pressures: The IMF has criticized El Salvador’s Bitcoin policy, warning of risks to financial stability.

IMF Restrictions and El Salvador’s Bitcoin Reserve

El Salvador’s relationship with the IMF has been complicated since adopting Bitcoin. The IMF repeatedly warned the country about risks associated with Bitcoin’s volatility, financial stability, and money laundering concerns.

In early 2025, El Salvador secured a $1.4 billion IMF loan, but it came with conditions. The government agreed to scale back its Bitcoin policies, including:

• No longer requiring businesses to accept Bitcoin.
• Phasing out government involvement with the Chivo Wallet.
• Prohibiting the state from making additional BTC purchases.

Despite these restrictions, Bukele made it clear that his Bitcoin strategy remains intact. He dismissed the idea that El Salvador would stop accumulating Bitcoin, responding to IMF critics with the phrase:
“No, it’s not stopping… and it won’t stop in the future. Proof of work > proof of whining.”

Src: Arkham

The Future of Bitcoin in El Salvador Under Bukele

With Bukele’s re-election and ongoing Bitcoin accumulation, El Salvador remains a global experiment in state-level Bitcoin adoption. The country’s strategy has faced criticism, but it has also inspired other nations to consider Bitcoin reserves.

Looking ahead, Bukele may push for:

• Further Bitcoin investments despite IMF restrictions.
• Bitcoin-backed bonds (such as the proposed Volcano Bonds) to fund development.
• A continued focus on tourism and digital assets to strengthen El Salvador’s economy.

While it remains uncertain whether El Salvador’s Bitcoin bet will pay off long-term, Bukele has shown he is willing to take risks to position his country as a leader in the crypto space.