Dr. Tobias Boos heads a bitcoin-related research project supported by the Anniversary Fund of the Oesterreichische Nationalbank. The researcher from the University of Vienna examines the cultural political economy of bitcoin in the global south. His current project zeroes in on the recent bitcoin adoption in El Salvador.
Tobias, what is your project about?
Well, we are investigating the use of bitcoin in El Salvador. In 2021, El Salvador introduced bitcoin as official legal tender alongside the US dollar. This happened pretty much out of the blue. The case of El Salvador is extremely interesting because it is the only country in the world that has taken such a step. In our project, we look at the economic, social and political causes and consequences of this policy. We analyze if and by whom bitcoin is being used. Plus, we want to find out how the introduction of bitcoin fits in with the country’s economic and development strategy. Naturally, the case of El Salvador also raises more general questions for researchers. They concern crypto assets, decentralized finance (DeFi) and digital finance, especially in the global south. We hope that our findings will shed some light on these topics on a more general level.
How does the OeNB’s funding help support your research?
The project team consists in a doctoral student, me and Juan Grigera, a fellow researcher, who will join the project team next year for a few months. Their positions have been made possible by the Anniversary Fund. In addition, the funding also helps pay two field research phases in El Salvador.
What is the objective of your project?
Simply the case study of El Salvador is extremely interesting. In addition, we aim to discuss the impact of this country’s unique policies through the lens of international political economy. In other words, when we analyze the events in El Salvador, we also consider current developments on global financial markets, development policy paradigms and North-South inequalities.
Why are you fascinated by this particular topic?
For one thing, crypto assets are a topic where different disciplines intersect. I am a political scientist who also has a background in development studies. Plus, I have already worked and researched internationally at various institutions. In the past, I have dealt extensively with social structures and populism in Latin America from a political economy perspective. All these aspects are now feeding into our current project.
Who are you working with on this project?
I am conducting the research together with a doctoral student and Juan Grigera from King's College London. Juan will be working on the project for a few months in 2024. In addition, we recently hosted a colleague from Georgia (Dr. Ia Eradze) as a Research Fellow at our Institute. Her research focuses on similar topics. And we also cooperate with colleagues from the Humboldt-Universität zu Berlin within the Circle U. initiative. These forms of cooperation are very productive for us, as our field of research is developing very fast. For this reason, we want to continue such collaborations as our project progresses.
Would you like to share some of your preliminary findings?
Sure. We started our project in June 2023, and so far, we have looked at the context in which El Salvador implemented its bitcoin act. And we have looked into different explanations why the country introduced bitcoin, comparing them with empirical data. We find that several promises have not yet been fulfilled. For example, improving financial inclusion of poorer sections of the population and lowering remittance costs. The same applies to the “popularity hypothesis.” Let me explain what this means. One reason that was often given for the rather surprising introduction of bitcoin as legal tender was that El Salvador’s incumbent president wanted to raise his popularity with this move. Interestingly, it turns out that his bitcoin policy is very unpopular – at least with the Salvadoran public. Overall, however, we still need to be cautious with regard to final results. One problem we face in the project is the lack of transparency on the part of the government. If you are interested in learning more about our findings so far, take a look at this working paper Juan Grigera and I wrote together: "The political economy of Bitcoin as legal tender in El Salvador. Temporary bandages to permanent wounds?" It has been published a few weeks ago in the UNU-WIDER Working Paper series:
Why is your research project relevant to everyone?
For some years now, we have been observing a development that we in our project refer to as "crypto rollout in the global south." This means that crypto projects and companies are testing business models, financial services and technologies in countries of the global south. In fact, not only the crypto industry is doing this, but also the digital finance sector in general. It is often unclear what consequences these experiments have in the respective countries and especially for vulnerable groups. The latter applies not only to the global south, but to societies everywhere. It is therefore important to scientifically monitor and analyze such developments.
What's next for your project?
In the coming months, we will primarily look in detail at the relationship between the introduction of bitcoin, the financial sector and the prevailing development model in El Salvador. We will also collect data on bitcoin users as part of our field research in El Salvador. General elections will be held there in February 2024, which makes our research even more interesting. Plus, we are currently working on two publications and hope to have our website online soon. This will help everyone interested in our research keep current with our progress.