As reported by Reuters, The World Bank responded negatively to El Salvador’s request for help in fully adopting Bitcoin as legal tender in the country, citing concerns about the transparency and environmental impact of Bitcoin.
“We are determined to help El Salvador in a variety of ways, including currency transparency and regulatory processes,” said a World Bank spokesman Reuters by email. “Although the government has asked us for help with Bitcoin, the World Bank cannot support this in view of the environmental and transparency deficiencies.”
The answer came hours after Salvadoran Finance Minister Alejandro Zelaya announced that his country had asked the World Bank for technical assistance. According to Reuters, the El Salvador government did not respond to its request to comment on the bank’s decision.
It is unclear where the World Bank’s concerns came from as they did not go into great detail, but they seem to point out some misunderstanding about Bitcoin. When it comes to transparency, Bitcoin’s open source, decentralized, permissionless public ledger is the de facto standard. It is now difficult to argue that the current monetary system, fueled by fiat currencies and fractional reserve banks, is transparent. Citizens around the world have limited access to detailed information about the inner workings of the current system. In contrast, Bitcoin is open to everyone to participate in the booths or to analyze – it is the most transparent payment network in the world.
However, the environmental debate has recently rekindled. With figures like Tesla CEO Elon Musk taking an active stance on Bitcoin’s supposedly high, CO2-emitting energy consumption, mainstream people seem easy to fall prey to such a discourse. However, Bitcoin has been shown to be energy efficient and make good use of energy that would otherwise be wasted. In addition, Bitcoin can help the whole world switch to renewable, clean energy sources.
The World Bank may not be aware of these facts, or it may simply use them as a gateway to curb the rapid adoption of Bitcoin by nation states. The International Monetary Fund (IMF) announced last week that it saw “macroeconomic, financial and legal problems” with El Salvador’s introduction of Bitcoin as legal tender Reuterswhich further shows that those in control of today’s monetary system could argue about a possible Bitcoin standard. Similarly, former U.S. President Donald Trump shared his thoughts last week, saying that he doesn’t like Bitcoin because it competes with the dollar.
In essence, the World Bank’s immediate retaliation could represent short-term detriment to El Salvador’s ability to meet its deadline to ensure Bitcoin is accepted across the country over the next three months. In the medium to long term, however, open source software could take on this task. The partnership the country has entered into with the Lightning Network platform Strike, for example, could allow some Salvadoran communities to take full advantage of the Bitcoin network. And since the IMF has declared that it is “not against” the introduction of Bitcoin in El Salvador, the latest said Reuters Report, future agreements for the Central American country could still be on the table.