Bitcoin Nation? Assessing El Salvador’s Crypto Experiment — A Conversation with Vladimir Pacheco Cueva

In the third episode of our new season, Global Governance Beyond Neoliberalism, we sit down with Vladimir Pacheco Cueva, Associate Professor in the Global Studies Department at Aarhus University.

Drawing on research in political economy and social policy, with a particular focus on Latin America, Cueva takes us through one of the most striking economic experiments of recent years: El Salvador’s adoption of Bitcoin under President Nayib Bukele.

Together with our host, Hagen Schulz-Forberg, the two explore what this unprecedented crypto-project means for governance, development, financial sovereignty, and everyday life in a country marked by political disruptions and environmental fragility. From the promises of innovation to the risks of deepening inequality, Cueva helps us understand how El Salvador’s Bitcoin project fits into longer histories of neoliberal reform and what its trajectory might reveal about the future of post-neoliberal politics across the region.

Academic Reference: 

Vladimir Pacheco Cueva, Hagen Schulz-Forberg; Bitcoin Nation? Assessing El Salvador's Crypto Experiment — A Conversation with Vladimir Pacheco Cueva. Global Perspectives 25 March 2026; 7 (1): 158699. doi:  https://doi.org/10.1525/gp.2026.158699.

This podcast was created and produced by the Research Center for New Critical Politics and Governance (CPG).

To watch the video version of this episode, please visit the link below:
https://cas.au.dk/en/cpg/podcast/mapping-the-planetary

Transcript

Hagen: Welcome to Planetary Choices. Today with me, is my colleague Vladimir Pacheco Cueva, with whom I'll be talking about a quite fascinating and important new phenomenon, cryptocurrency, and the practices and political developments around it, economic and political. Vladimir is a political economist by training, who has spent a lot of time working on, let's say, global governance from below.  He's been looking at social consequences of resource extraction and mining and recently in a project on El Salvador, which has been an example of a new phenomenon new political practices, and economic practices, and financial adventures, by making Bitcoin a national currency. That is Vladimir's specialty, but now this is of course a different kind of mining and still he takes the bottom-up approach to it. Vladimir is a colleague of mine here at Aarhus University, where he's also teaching the International Studies program. Vladimir, what made you go into the direction of studying cryptocurrencies in El Salvador and how is it connected to larger questions of global governance after, let's say, a neoliberal hegemony?

Vladimir: Yes Hagen, I started looking at cryptocurrencies, specifically Bitcoin, because that is, my interest was drawn by the introduction of Bitcoin in the country in 2021 and I immediately started to see the, took the opportunity to see how that project will, what the impact will be on the population,  because one of the claims that was made was that it was going to revolutionize, or improve people's lives. So, I thought it would be interesting to track the development and of course, one cannot look at Bitcoin without looking at the international financial system and also looking at the technology behind cryptocurrencies. So, I started having a look at all of that. It's relatively new to me, so I don't think I can be called an expert, more a student of developments in this space. Uhm, in terms of the financial implications, I also want to, I'm also interested in this space as a, kind of a response to the crisis and legitimacy of the international financial institutions. 

Hagen: So, we do see this as part of a larger phenomenon even though we're going to talk a lot about El Salvador and also your findings of this project. What we're seeing with Bukele and the way he runs his presidency and the way he acts, you see this part of a larger pattern of changes?

Vladimir: Definitely, and it has to do a lot with the crisis of neoliberalism, the project that started in the 80’s, with opening up markets of all types with deregulation of the economies, both in developing and developed countries. That mode of thinking has come, has faced a number of barriers and collapses, you know, the global financial crisis of 2008 was probably the last one and it is no coincidence that, that's exactly when Bitcoin, you know when, that's when we start to see Bitcoin appearing. Uhm, so.

Hagen: Could you tell us a little bit about those cryptocurrencies, because the uninitiated listener may think, well, wait a minute, you're saying neoliberalism has collapsed, but isn't cryptocurrency the El Dorado of neoliberalism?

Vladimir: Yeah, well, I wouldn't say collapse, but it is in crisis.

Hagen: Okay, agreed.

Vladimir: And it is facing a lot of problems, and one of the things that we see is a lot of counter proposals, and one of them is this. So, coming from, especially from the, what I would call the anarcho-capitalist, or the libertarian streak of liberalism. So, it is still within liberalism. Unfortunately, it's not a socialist, or any other type of response. It is still what I would call the right-wing part of liberalism.

Hagen: Yeah. Okay.

Vladimir: And these people have been thinking about ways of circumventing the state for a very long time. Uhm. So, the first attempts, or the first ideas about creating things like digital currencies, came in the 90’s and of course, before then you have the popularization, or the democratization of cryptography. So, that enabled then people thinking, especially in, you know, computer scientists, to think about creating systems, digital systems that will replace the centralized systems that have been in operation ever since the end of the Second World War, you know, the Bretton Woods System. So, to be able to use a financial system, or a currency that circumvent the state and that's a long history culminating with the Satoshi paper, the white paper on, uhm.

Hagen: On Bitcoin.

Vladimir: On Bitcoin, yes, and its creation, because that was just the paper, but then you have the actual system and everything that has happened ever since, you know, the initial deployment and the take up from those people who were interested, because at the same time you had the coding and electronic systems, you also had what I would call a community of followers, of early adopters, or people who wanted to find alternatives to what they could see was a system in distress. You have to remember that the global financial crisis was very, it affected basically every market in the whole world. One thing I must say is that the-, globally, the cryptocurrency market is still small, relatively. So, for instance, Bitcoin, the market capitalization currently is 4.03 trillion dollars. If you compare that with, say, the smallest of the markets, the foreign exchange market, which is valued about between four, depending on who you ask, four to six trillion dollars. If you look at the total wealth in the world, our global welfare is between 370 trillion to 400 trillion. So, the Bitcoin market with its four trillion, it's relatively small, it's incipient, it's emerging, but the reason why we're so interested in it is because it is a different type of market. It is one that's outside, uh, well, up until...

Hagen: Is it? 

Vladimir: Yeah, that's right. Up until between 2018, I think, ever since then, governments have become much more interested in Bitcoin.

Hagen: Well, it's been a dramatic, you know, they've been trying to get rid of it, regulate it.

Vladimir: China, yeah.

Hagen: China's been trying to get rid of it. During the Biden administration there's been a harder take on it, trying to turn them into some kind of commodities, or assets that they argued they weren't, and now things have changed with the joint administration and with the stablecoin act from earlier this year, and more proper law to come, but I wanted to pick up on something, when you say Bitcoin is an alternative, but maybe you can talk a little bit about the technology and also about if it's anti state, or if it's-, the original dream behind it was something of a decentralized, anarchist vision of private person's able to trade with each other independent of laws and regulations, but just based on mutual trust.

Vladimir: Yeah. 

Hagen: And that trust is guaranteed through the technology, right? And the protection of the data.

Vladimir: Yes.

Hagen: How come that Bukele, who is arguably, a president of the state, so, how can he justify the usage of that Bitcoin? Is it because of the image that he gave himself as, actually not being a state actor? He's not from the political class. He's just like all of the.

Vladimir: A renegade, yes. 

Hagen: A populist, who's coming from the outside. He's a real person and a renegade, and how do you explain that?

Vladimir: Uhm. So, this is part, I guess, of a political trend that we see now with people like Trump, but before Trump, there were many other politicians around the world, authoritarian, who were looking for alternative, especially in the development world, alternative forms of market participation, and this provided the perfect opportunity for somebody like Bukele, who wanted to engage with the global market in a completely different way. Not through, you know, relying through aid, or government-to-government help, but through markets. Uhm, but we have to remember that even markets, for instance, you know, Standard & Poor's will give El Salvador a certain rating. So, he even wanted to circumvent that, and this provided the perfect opportunity. Uhm, but we see it with other, you know, there's a movement in developing countries for authoritarian regimes. You know, we saw it in the Philippines with Duterte, we see it in Turkey with Erdogan, we've seen it in Brazil with Bolsonaro, who come and they're thinking outside the boxes. They're not just authoritarian, but they're also thinking about different ways of engaging with the market, and many of them are, at the same time, they're nationalist, but at the same time they want to engage with the international markets in different ways.

Hagen: Has Bukele ever flirted with the idea of joining BRICS, or playing BRICS in the dollar system?

Vladimir: No, no, he's completely pro-Trump. You know, very, very close to Trump, and uhm, that has with the further regulation of Bitcoin in the United States, that has helped him. That has helped his project, his national project in El Salvador.

Hagen: Yes.

Vladimir: So, perhaps, you know, one of the things that we should remember is that, uh, the actual technology that, that uhm, which is cryptocurrencies, our base is… Part of it, a big part of it is blockchain technology, which I think is going to revolutionize a whole lot of things, because, basically, what you have is a way of making sure that every transaction is public while keeping the people that are making the transactions, out of view, private.

Hagen: Mhm. 

Vladimir: And that's one thing, and the other thing is that it's actually, it's almost foolproof. In other words, everybody in the network will have copies of the, you know, the blockchain, the network broadcast, every time that there is a transaction, and so it's fairly foolproof.

Hagen: It's because of this proof of work material, of Bitcoin…

Vladimir: Yeah, that's right.

Hagen: That it stamps it in a decentralized way.

Vladimir: Yeah, and the other big thing that they say is, it stops big, or any cryptocurrencies from double payment, which is one of the big things that these libertarians are against, you know, the state using the same money for different things. You know, so inflation, in their view, is impossible with Bitcoin.

Hagen: Hm. Yeah. So, we see Bukele emerging. When again did he become president?

Vladimir: In 2018.

Hagen: In '18. So, good timing as well for this story here.

Vladimir: He must have had, he must have had some-, he must have known about this even from before. Yeah. But anyways, he became president in 2018, and then, uhm. 

Hagen: He's not, also he's not only been the Bitcoin pioneer, he's also been combining it with a very tough take on gangs and crime and going to prison and creating the Bukele model of-, of an alternative state. Of not only providing you with, presumably, at least that's what the narrative is, financial independence.

Vladimir: Yes, yes.

Hagen: But also security.

Vladimir: Yeah, his vision of, he's-, his developmental model is the Asian Development Model. You know, the, uhm, the one that basically says that the state has precedence over everything else. Economic development is more important than social development. Uhm, and, uhm, this, he keeps referring to Singapore as the model, which, you know, and all of those countries in Southeast Asia basically relied on what we call the developmental state, uh, where there was less emphasis on human rights and that sort of thing, and more emphasis on economic development, and so that that's the model that he wants to emulate. Uhm, and this is the model that now, uh, lots of people are very interested in, especially in Latin America he's become a hero and this, because of his, not just in Latin America actually, but because of his hard stance on the gangsters, the country-, you know, mafia basically. Uhm, and having succeeded in eliminating them to a large degree from the streets, then everybody's interested, or all of a sudden everybody's interested in, what is he doing? Uhm, so, that together with, you know, these adventures, the financial adventures, uh, has made him an intriguing figure in the continent and beyond. Uhm, I think that he has had more success with eliminating street crime, than with the uh, with the uhm, the economics. The economic side.

Hagen: Okay, well let's scratch a little bit on that surface, because there are many parts to that story. First, I would also like to hear about the project, the general project in which this study also emerged, but just to go through some of the problems that are happening with Bitcoin is his promise, if I remember correctly, is about, you know, making it available to everybody. So, each El Salvadoran received thirty dollars or so, I believe, and then he built Bitcoin city, or he wants to develop Bitcoin City, and he wants to mine Bitcoins close to uh, thermal energy. So, to use an ecologically friendly way of mining Bitcoin and all that. So, he tries to really match all those narratives and challenges and well, what, what's your verdict?

Vladimir: Uh, you know, my verdict fluctuates as much as Bitcoin does, because, uh, when he first started, I thought this is... 

Hagen: It's a joke.

Vladimir: This is going to be a disaster, yes. I thought this is a Russian roulette, so I was on the side of the skeptics. Of course, I've been proven wrong. You know, he uhm, the Bitcoin, he bought 25 million dollars worth of Bitcoin in 2021. Now, he has 735 million dollars, because Bitcoin has gone up, of course, in those years that he had been buying. I don't know what he's doing with that money, because it's very difficult to find, uhm, a public source, or an available source that we can examine, that we can use. This is-, these figures that I have here come from the Bitcoin office, you know, the country's Bitcoin office. So, I guess when I-, this is the way I see it, is that it is easier to eliminate, for instance, gang violence. That's a project that may take depending on, you know, what measures you use, between one year to five years. He did it in one year. Uhm, but economic development requires, you know, ten to fifteen years. I mean, if we have a look at the examples in Southeast Asia, all the Dragons took fifteen to twenty years to achieve that rapid growth in development. So, uhm, all these adventures are tentative at the moment. We see a lot of infrastructure projects that are happening in the country, but uhm, economic development, measured in the traditional way, I think will take a lot longer. Uhm, so, I don't think we can claim that the project has been successful, or a failure just yet. It remains to be seen, just as Bitcoin as well. Because, you know, there’s, we can see it this way, you know, there's a lot of skeptics in the Bitcoin camp, around the world, and there's those with confidence. So, uhm, I don't think I can say now, you know, it's going to be a disaster. So far it is good. What my main problem with having made it into national currency, that was, I think that was not necessary.

Hagen: Yeah, but they have moved out of it, right?

Vladimir: They moved out of it in April this year, they were forced, yeah, to move out, and I think it's a positive development, but at the same time, Bitcoin itself has become much more accepted around the world. You know, there's more regulation and that sort of thing. So, I guess what I wanted to say is that uhm, making this currency into national currency, basically put the whole country in a risky situation, and this is what the IMF kept telling the, you know, the country, the president, you are going to, uhm, it's too risky. So, uhm. 

Hagen: Could you tell, uhm, the audience a little bit about the origins of the Bitcoin in El Salvador? It's not that Bukele came and invented it, but there was a bit of a traditional use, traditional, or original use…

Vladimir: There was a pilot project.

Hagen: Bitcoin Beach, or what was it called?

Vladimir: Yeah, there was a pilot project called Bitcoin Beach, where you could use Bitcoin to pay for goods and services. Uhm, you know, in, they were stored-, all the stores in, in Bitcoin Beach received Bitcoin as a form of payment, and it was a success, and so they thought; okay, well, let's move that to the national level. And so, uhm, you could see things such as ATM machines popping up everywhere because of the infrastructure that was created to make it possible for people to pay with Bitcoin, if they so wish. The problem is that the-, what I saw-, I saw another problem that the people were not informed or educated about what they were using. 

Hagen: So, everybody got thirty dollars.

Vladimir: Everybody got thirty dollars.

Hagen: On their phone?

Vladimir: Yes. So, you could download the app. The app came loaded with thirty dollars. Many people just cashed it and never used the app again. I still have mine and I, maybe the thirty dollars, I don't know how much it's worth now. It must be...

Hagen: Wow, you can invite me for an ice cream.

Vladimir: Haha yes. And uhm. So, there's basically two camps here. One are the people who are really interested in investing in Bitcoin. It's a minority in El Salvador, just as it is around the world, and there is a larger group who are not using it. Some people, a lot of them, are basically just not interested in this form of investment, or as a financial instrument, and then there is a minority within that group who are against it ideologically. Just as you have a camp, you know, you have also two camps within the Bitcoin, which are the, I call them ideological entrepreneurs who are, you know, an arch of capitalists and libertarians who think that this is, uhm, this is the best thing.

Hagen: It's going to bring down the deep state.

Vladimir: Yeah, and the pragmatists. You know, the pragmatic entrepreneurs who wants Bitcoin to grow regardless of the type of negotiations you make with the state and that sort of thing. That camp has basically won. 

Hagen: The pragmatists.

Vladimir: Yeah, the pragmatists, you know, they-, Bitcoin is now much more accepted, and regulated, and the big banks continuously finding ways of work with Bitcoin, you know, under cryptocurrencies. Uhm, so, here you have two camps and I think that the reason why I wanted to look at El Salvador it's a fairly marginal place, you know, in world politics, but you can almost see that happening, you know, being echoed around the world where you have people who are interested in this as an instrument and they use it. I think you've told me about this story of this woman, or there's this story about this woman in Afghanistan

Hagen: Yeah. Yeah. There was a female entrepreneur who, uhm, paid her female employees in Bitcoins, or Satoshi’s, maybe not a full Bitcoin. Uhm, and when the Taliban regime came back, they could pocket their ledgers and move to another country, and they would have financial freedom.

Vladimir: That's right, yeah. Which is very different to, you know, I, years ago I heard this story about these, uhm, refugees from Iran, who transferred, basically solo their assets in, — Iran is, you know, with the Shah of Iran, the followers —  they sold everything, bought gold and then traveled with gold, but of course, gold is easy to lose and easy to steal, and they were victims of crime, you know, so they lost a lot of their wealth in leaving Iran. So, the same cannot happen with Bitcoin, because it's all safely secure in the, uhm, in the virtual world. Unless you lose your...

Hagen: Unless you lose your key.

Vladimir: Yeah, yeah. Which has happened. Uhm, so you have this group, and then you have the majority who are not interested in this, and there are also, uh, you know, I would say, as Bitcoin becomes more and more prevalent, there will be people who will be against it. Partly on ideological grounds, partly on the idea that, uhm, one of the things that happened in the suburbs is that they were connecting it to crime and I don't know whether people are going to think the same thing, you know, that this is connected to international crime or to hiding money, or evading tax or, you know, in other words using. 

Hagen: I see what you mean. Some people would argue that the crypto world has gone through this kind of crisis of trust, and then what happened in '21’, '23 with these dips and with also big frauds and big blow-, I don't-, I've forgotten the name of the coin.

Vladimir: World coin. Yes. The world coin, I think it was called. 

Hagen: Yes, but also this whole exchange, I think it was FX.

Vladimir: Oh, yes.

Hagen: Uhm, just with the Bankman-Fried fraud, it all blew up, and so some would argue that now, also the, of course, the, uhm, what's the, the Binance. Yes, the head of Binance, he was, fined with a lot of money and had to pay the biggest fee, I think, in American history, because of what he did with Binance. So, somebody would argue that now the industry is through and, you know, it has weeded out all the bad guys. Regulation is coming, so it's secure. 

But let's stay in El Salvador and maybe try to zoom out again, after your findings. So, we look at El Salvador, we look at new, you know, new financial practices in a, in a new, or, new, let's say idiosyncratic political system, precedent with a base cap, playing all sorts of tricks. How do you-, how do you start to see El Salvador moving in, for the next five years and what kind of conclusions do you draw, uhm, generally speaking to say global governance, or Global South movements?

Vladimir: Uhm, so I think that what is happening in El Salvador, like I said to you is this divide. I think this is going to be repeated again, and are going to be replicated around the world. There's the vibe between the ones who engage with Bitcoin and cryptocurrencies, and the ones that don't. I don't think that having cryptocurrency in the country does much for developmental purposes.

Hagen: No, okay.

Vladimir: I think that, I mean, as a form of payment yes, but as a store value, I was, uhm, you know, I'm always reminded about the, uhm, the uses of money, store of value, form of exchange, and a unit of account. It does really well, increasingly well as a store of value...

Hagen: Yeah.

Vladimir: But the other two is not very good. You know, it's very, very volatile and therefore, as a union of exchange,  it's-, will have these problems, and what I mean by that is that, in El Salvador the presence of Bitcoin will not easily transfer into economic development, unless the president, or the authorities, do something with that money coming into the country. Uhm, one of the first things that I thought could have been done is, you know, El Salvador is one of the biggest recipients per capita of remittances. I thought, you know, it'd be very, very advantageous for the government to channel most of those remittances through, uhm, the wallet that was created, you know, for people, and to make it a free transfer. Then the government could keep this, this reserve for a short period of time, say, you know, five days. Use the money, and then give the recipient the money that they were sent. People will save the exchange, the cost of sending the money, and the government could keep some money, you know, from this transfer, but nothing like that has happened. They're more interested in attracting, uhm, or well attracting Bitcoin entrepreneurs to the country and showing that they mean business when it comes to, you know, taking Bitcoin seriously. So, I do see in the next five years nothing much happening. Perhaps, you know, it all depends on whether...

Hagen: Will Bukele still be in power in five years?

Vladimir: Well, he changed the-, uh, constitution…

Hagen: He changed the constitution, right? 

Vladimir: So that he can continue being president, could be re-elected himself. Sorry, so that he could be re-elected in the future. This is a feature of many of these, you know, authoritarian regimes, yeah. So, he may be president. If he's not president, there may be some figure there that he has control over.

Hagen: Okay, I would also be interested in, because you mentioned foreign investors or let's say that, you know, the investor class in the United States and around the world. How about, El Salvadorian entrepreneurs, or let's say, the middle class, or the, uhm, those who would do business and would be playing an important role in the economy, what do they...?

Vladimir: So, the middle class, a fraction of the middle class has taken this up, you know, welcome the opportunity, uhm, but large parts of it are not interested. They just don't understand what a cryptocurrency is. It is too esoteric for them and, you know, the government hasn't made any concerted effort to educate people on what this is. So, those who have taken it up in the middle class is because they've done the research, they've done their homework and they go, okay let's, uhm, you know, let's have some savings in here. Uhm, but by large, most of them... I can, uhm, I can say that you know we-, so we did a survey and the results from our survey basically coincided with a survey that was carried out by The Chamber of Commerce. So, February 2022.  So, that's almost a year after it was introduced. In the case of 13.9, almost 14 percent of businesses have made sales in Bitcoin. So, only, I mean, I don't know, that figure hasn't grown, it is still marginal. If, you know, they were asked, "What will you do when you receive Bitcoin?" You know, this is from the same Chamber of Commerce. What will you do when you receive, uhm, you know, the thirty dollars incentive? Most of them, 53 percent of businesses and 52 percent of individuals, said that they'll change it for US dollars and they will use it for their everyday expenses. Whereas investment, those who would invest, were six and nine, six percent and nine percent.  A very small percentage of the population are doing what you're supposed to do with it. Most of them basically would just spend it, and that's what they did. So, it hasn't made the impact that you would expect, you know. From, uhm.

Hagen: Well, as you said yourself, economic changes take ten, fifteen years.

Vladimir: It takes a long time.

Hagen: So, now we're at year five or something.

Vladimir: Yeah.

Hagen: Three at the introduction of Bitcoin, and uhm.

Vladimir: Yeah, so the problem, I think, is the fluctuation, and the other problem is the lack of knowledge about it. So, if you see, say for instance, you're not educated into Bitcoin and you look at it from the outside, you see this asset that goes up and down, you're probably going to say, no, no, don't, but if you are educated into, you know, all these fluctuations in whatever you do, you know, if you invest in the stock market, it's the same thing and you have a long term strategy, then of course you would do it, yeah?

Hagen: Mhm.

Vladimir: But the proportion of people doing that is very small.

Hagen: I see. Yeah.

Vladimir: So, and I think it will remain more small because, uhm, it's a, like I said to you, it's esoteric. You know, learning everything that will make it a popular, or people's, uhm, investment option is...

Hagen: Yeah.

Vladimir: It's very small. 

Hagen: Until, probably, you just have it on your phone and pay everything.

Vladimir: Unless yeah, yeah, and this is what I...

Hagen: If it's intuitively through an app or something.

Vladimir Yeah, yeah. As a form of payment, I think it works.

Hagen: Yeah.

Vladimir: Well. As a store of value, it's a completely different thing, especially for people here, they were making jokes. For instance, when it was introduced, they were saying, you know, people come into a restaurant and people would ask, how much is this meal? You know, some of them Bitcoin, uhm, at the end of the meal the price would usually go up and this way it's, you know, it's many more Bitcoin. Oh, it just fluctuated while you were eating. Yeah? 

Hagen: Haha.

Vladimir: And it is true. So, people in that job, people were catching up that, you know, this thing goes up and down. What one of the people that I talked to said is, as soon as they give me the money in Bitcoin I transfer it to the US dollars.

Hagen: I see.

Vladimir: Yeah, so in the wallet, they could transfer the money into-, as soon as they got it, so they didn't wait. 

Hagen: So, to be on the safe side.

Vladimir: That's right, to be on the safe side. They didn't like this-, yes of course it could go up, but you never know.

Hagen: The risk is too high.

Vladimir: Yeah, the risk is too high and the needs, the needs of… You have to remember that this is a poor country, so the needs are immediate, you know, waiting for a year you may be... 

Hagen: Yeah, maybe an investor's mentality, putting in a job of middle, long term is not everybody's possibility.

Vladimir: That's right, yes. So, this is a, even though the barriers of entry are, uhm, the entry barriers are very low, because you can with one dollar, you can already become an investor and using an app that's given by the government, that's free, you know, all of these things. Despite those things, you know, people don't have that long term, and I'm not blaming them. I think that even if you had a lot of education, people will still be, uhm, resistant to it, and I think that the same would happen in many other countries. So, this is, I guess, looking at El Salvador is kind of like an experiment that's, you know...

Hagen: Yeah.

Vladimir: Something of what may happen around the world.

Hagen: So, Vladimir, what are your now preliminary conclusions about what is going on in El Salvador and with the Bitcoin experiment?

Vladimir: So, I think that uhm, of course it's an alternative, you know, form of investment. Uhm, I don't-, I think that it will remain the domain of a minority. I don't think it's going to, you know, it is going to be popularized. 

Hagen: Maybe as a final thought experiment, if-, if Bukele were not president anymore, but some form of democratically elected parliament comes back, voted in, maybe by this, this middle class that is uninformed, or uninspired. Would they keep the Bitcoin?

Vladimir: They will keep the Bitcoin; I mean the infrastructure is there. They will keep it, yes. So, in that sense, it's, you know, an addition to everything else going. They may actually do the right thing and educate people. You know, in other words, try to get everybody to, uhm. I think they would keep it, because, as you know, in, like I said to you, in April this year it stopped being national currency, it's now just an investment like any other. So, it doesn't matter in that, to the state it will not make any difference to the state coffers. It doesn't impact the credit rating of the country, so it will probably stay as an institution. Obviously, you know, from the figures it has, they've done really well.

Hagen: Yes, it's astonishing.

Vladimir: Yes. Yes. The initial investments that, uhm, the money that he put in, he's now made a whole lot of money. Yeah. 

Hagen: So, I think we're, well, we're coming to an end slowly. Are there any last words that you would like to formulate?

Vladimir: Yeah, I think when it comes to global, the, uh, this one thing that I wanted to add and it's the consumption, the energy consumption.

Hagen: Yes, of course!

Vladimir: Because this is a planetary and also a governance aspect to it. So, I was looking at the figures, you know, for how much, uhm, how much energy is consumed. How much energy Bitcoin consumes, and of course, this doesn't include all other cryptocurrencies. So, Cambridge has-, runs this project called the Cambridge Bitcoin Electricity Consumption Index. You know, where they're trying to figure out how much electricity is used in the whole process of producing Bitcoin, and it's quite significant. Uhm, you know, it stands at 175-terawatt hours which, if you compare with other industries, for instance, here we can see copper production, it's 167. You know, copper production is an industrial process, it requires a lot of energy. All the fridges in the US consume 104-terawatt hour. So, Bitcoin consumes more, way more. AC conditioning is the highest in your 2.159, and if you annualize that, for instance, when you compare it with gold. Gold, it's something like 175-terawatt hour compared to Bitcoin, which is about 250. So, it is quite considerable, you know? 

So, what this means globally is that the one thing that people see as an alternative form of finance, is the one thing that is adding to our woes when it comes to carbon footprint and the more of these things that come up, because it is a market, it's a market response to a crisis. So, people are trying to get out of a sinking boat, going into other ones that are just making the problem worse. This is an individual response to a major problem, a major crisis. It's not going to solve the problem; it is actually exacerbating it. 

Hagen: So, the final conclusion is actually, well, they may have done well regarding the numbers and the investment, but the externalities, or the costs of it from an environmental perspective are disastrous.

Vladimir: Disastrous, yes. Yeah. Or adding to an already bad situation, yes. And I think this is the problem with market-led solutions, you know, and technological solutions to a social, a political, social economic problem, such as the carbon footprint. You create an alternative and then it creates a new problem, such as in electric cars. Yeah, of course you don't use fossil fuels anymore, but then you mine the lithium, and then that becomes a new problem. You know, what are we going to do when we have to dispose of these batteries, or when we have to, uhm, renew these? So, that is something that we're going to face in the next few years.

Hagen: Thank you, Vladimir. We'll probably, we'll be talking to you then in a couple of years again. Thanks Vladimir. Thanks for joining Planetary Choices. We've learned a lot about this case, you know, taking away some of the, well, the myths about Bitcoin and seeing it in actual practice. Uhm, the message is mixed. There's some upside, but also a lot of depressing news and consequences that need to be tackled. Stay tuned.

Editor’s Note:

During the conversation with Vladimir, the figures cited for the energy (terawatt-hour) consumption of Bitcoin and gold were inadvertently mixed up. For accurate and up-to-date estimates of Bitcoin’s energy use, we refer our listeners to the ‘Cambridge Bitcoin Electricity Consumption Index’, which is included in our further readings. While the specific numbers mentioned in the discussion are incorrect, the broader point remains unchanged: Bitcoin’s energy consumption is significantly higher when compared to that of e.g. gold.

Further Readings:

Berger, P.L., & Hsin-Huang Michael, H. (Eds.). 1988. In Search of an East Asian Development Model. 1st ed. Routledge. https://doi-org.ez.statsbiblioteket.dk/10.4324/9781003575719 

Cueva, Vladimir Pacheco. 28 November 2024. Anti-ideology in El Salvador? Continuities and discontinuities in a radicalised and environmentally fragile country. In Ideology, Post-Ideology and Anti-Ideology in Latin America: Reflections from the Last Decade. Edited by Baisotti, P. & Lagos Rojas, F. 1 ed. London: Bloomsbury Publishing plc, p. 157-178.

Freedman, Camilo. March 2025. ‘They turned our home into a cemetery’: The high price of El Salvador’s Bitcoin City dream. The Guardian. https://www.theguardian.com/global-development/2025/mar/12/el-salvador-bitcoin-city-mangroves-president-nayib-bukele

Kenen, Peter. 2008. Bretton Woods System. In The New Palgrave Dictionary of Economics. Edited by Steven N. Durlauf and Lawrence E. Blume. 2 ed. Palgrave Macmillan.

Kim, Eun Mee. 1998. The Four Asian Tigers: Economic Development and the Global Political Economy. Academic Press.

Nakamoto, Satoshi. August 21, 2008. Bitcoin: A Peer-to-Peer Electronic Cash System. SSRN. http://dx.doi.org/10.2139/ssrn.3440802

University of Cambridge. n.d. Cambridge Bitcoin Electricity Consumption Index. https://ccaf.io/cbnsi/cbeci