Bitcoin will be a success in El Salvador, boosting remittances, industry and gains from remuneration. Per capita GDP is likely to double over the next decade as remittances, the energy sector and tourism all grow.
El Salvador made waves in June 2021 by adding bitcoin as a legal tender alongside the U.S. dollar. It was a historic event. The use of bitcoin has the potential to dramatically benefit the small Central American country, but by how much? And what will it look like?
Let’s briefly examine El Salvador’s geopolitical situation and try to predict how bitcoin will affect the following:
- History and Politics
The History Of El Salvador
Prior to Spanish colonization, the area of El Salvador was inhabited by two cultures. The more relevant to the modern state and capital city of San Salvador are the Pipils, arriving around 900 A.D. They likely came from the northwest due to language and religious ties to the Aztecs. The second culture is the Lenca, populating the eastern parts of the country with strong cultural ties to central Honduras.
The area of El Salvador was the frontier for many pre-Columbian Mesoamerican cultures. First, the Olmecs, then the Mayans, then the Lenca and finally the Pipils from central Mexico. Despite all of this cultural heritage, El Salvador never grew to become the center of a great empire itself and suffered from tense tribal warfare. The only impressive classical site is called Tazumal, which became uninhabited circa 1,200 A.D., long before the Spanish arrived (though there are many small sites around the country).
Historical sources are scant prior to the Spanish. If the Pipils were descendants of the Toltecs, they did not replicate the scale of megalithic buildings seen in central Mexico. The most important reason being the natural limits placed on their development by geography.
The region that is present day El Salvador has seen a few periods of relative prosperity, the Tazumal era of 700 to…