On June 8, El Salvador became the first country in the world to adopt bitcoin as legal tender. President Nayib Bukele first floated the idea publicly three days earlier, during a bitcoin conference in Miami. The country’s legislature passed his three-page bill by a 62-22 margin.
Within 24 hours, cryptocurrency devotees on Twitter were claiming San Salvador as the world’s next big tech hub. Hours after Bukele announced El Salvador would be the first country to accept bitcoin payments for all government business, Justin Sun, founder of the cryptocurrency platform TRON, predicted “crypto investors and entrepreneurs” will move to El Salvador en masse. The country’s president, a former businessman, responded with his own pitch for bitcoin enthusiasts to immigrate to El Salvador citing tax savings, surfing beaches, and lax immigration requirements.
Bitcoin fans responded enthusiastically, looking into buying a home in El Salvador, asking questions about how to begin the residency process, and wondering what the price of Salvadoran beachfront property would be in bitcoin. Changpeng Zhao, CEO of Binance, the world’s largest cryptocurrency exchange, tweeted a gif of Mickey Mouse frantically packing a suitcase: “Enticing,” he wrote.
Divergent realities on the ground
Crypto investors’ enthusiasm for moving to El Salvador reflects a broader trend in the tech world. In recent years, a subset of Silicon Valley’s tech workers have declared themselves ready to abandon the Bay Area and other high-cost US metropolises citing high taxes, scrutiny from local politicians, and hostility from residents who blame them for making their cities unaffordable. On Twitter, that angst has translated into a cycle of influential entrepreneurs exhorting their followers to move en masse to newer, friendlier tech hubs including Puerto Rico; Nevada; Austin, Texas; Miami, Florida; and more.
But tech migrants’ confidence in creating new beachfront havens for founders and investors, free from the tyranny of property taxes, rests on the assumption that software engineers and crypto investors won’t face the same challenges as the residents who already live there. In El Salvador’s case, violence, poverty, corruption, and encroaching effects of climate change have already forced hundreds of thousands of citizens to flee involuntarily and seek asylum abroad. (Many seek asylum in California, the same high-tax state that some tech workers feel compelled to flee.)
The same is true, on a smaller scale, for some of the proposed alternative tech hubs in the US. In Miami, tech workers are now flooding into waterfront skyrises while the Army Corps of Engineers draws up plans for a 20-foot seawall to carve up the streets below. In the early 2010s, downtown Las Vegas and Zappos CEO Tony Hseih invested hundreds of millions of dollars to attract tech workers to the economically disadvantaged area. After a few years, many of the early boosters of Las Vegas as a tech hub lost interest and left.
A few Twitter users claiming to be Salvadoran citizens responded to Bukele’s tweet pointing out concerns for those living in El Salvador for an influx of cryptocurrency investors. “You will need to review those property tax policies for foreigners because the potential capital inflows will drive up housing prices and could make it inaccessible for Salvadorans,” one user wrote. “You have to think about our people, too,” he added, in Spanish. “I thought you were with the poor, but seeing that there’s no plan to charge property taxes it’s clear that this is just more of the same,” tweeted another user in Spanish.