How El Salvador’s ‘Cool Dictator’ Is Using Bitcoin to Cement His Power

By Ross Pomeroy | August 21, 2025 | 9:35am

Photo by Casa Presidencial El Salvador

Economy Bitcoin

How El Salvador’s ‘Cool Dictator’ Is Using Bitcoin to Cement His Power

Earlier this month, El Salvador’s President Nayib Bukele secured changes to the country’s constitution that will effectively allow him to become leader for life. Bukele’s allies in the Legislative Assembly, who control a supermajority, voted to extend presidential terms to six years from five and to remove term limits. At 44-years-old, the self-described “cool dictator” could be around for a long-time.

As president, Bukele has dismantled democratic institutions – notably through dismissing supreme court judges that defied his policies – curtailed political and civil liberties, surveilled independent media, and ruthlessly attacked the political opposition.

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But he also has popularly and harshly cracked down on gangs and crime. Through militarizing the police, suspending certain constitutional rights, and conducting mass arrests and imprisonment, Bukele’s government slashed the homicide rate from 53.1 per 100,000 residents in 2018 to just 1.9 per 100,000 in 2024. Bukele himself has been rewarded with stratospheric public support, often earning north of 90% approval in opinion polls.

At this point, Salvadorans seem okay with potentially losing their democracy. It remains to be seen whether this flirtation with authoritarianism lasts.

One way that Bukele, the self-appointed populist, had apparently hoped to nurture long-term appeal from the masses was through making them rich with cryptocurrency. In 2021, he declared bitcoin to be legal tender, the first such move for any country, and had his party swiftly pass laws to advance its adoption amongst the general public.

Drilling into the policy and its effects, a duo of social scientists extensively researched the landscape and conducted 46 interviews with politicians, scholars, policy analysts, and prominent crypto enthusiasts in El Salvador. They found that embracing bitcoin has not promoted financial inclusion. It also hasn’t made it easier for Salvadorans aboard to send money home or spurred economic growth. Instead, centering bitcoin has provided Bukele – himself a crypto advocate – with opaque means to cement his power.

So far, the country has paid $375 million to set up bitcoin ATMs, roll out a national wallet called Chivo, and provide each Salvadoran $30 in bitcoin for signing up. Bukele and his allies insisted that making bitcoin legal tender would ease the process of sending remittances into the country, provide financial stability, and bank the unbanked. Just one in four Salvadorans have a bank account.

Voting with their wallets, Salvadorans have largely disagreed. Almost nine in ten people have not made any bitcoin transactions throughout 2023, according to polls. They still prefer cash. For roughly two-thirds of Salvadorans, the reason they don’t have a bank is simply because they don’t have enough money to build savings.

While bitcoin has not improved the lives of Salvadorans, it has enriched government officials and their friends.

“It functions as a conduit for favouring cronies close to the president with the use of public funds, through the establishment of the government-funded Chivo wallet company, in charge of the implementation of the bitcoin policy,” the authors write.

El Salvador currently holds 6,262 bitcoins, presently valued at over $712 million, and the country regularly buys more. However, “the government still does not offer information about the sources of the funds that went to make those purchases and, importantly, whether the central bank is the entity responsible for safeguarding those funds,” the authors note.

“The bitcoin law implementation undermined accountability and transparency in the use of public funds and empowered a group of well-connected businesses personally tied to the president,” they added

Since their inception, bright-eyed crypto proponents have touted blockchain technologies as a source of financial liberation for people in authoritarian or developing countries. This utopian vision has not come to pass. Instead, cryptocurrency has more often been used in predatory schemes designed to extract profits from the poor and create new forms of dependency. And in places like El Salvador, it’s being opaquely used to cement the power of an authoritarian.

As President Trump advances laws that swell his own crypto investments, it’s hard to deny that something similar is happening in the United States.