El Salvador on Tuesday (September 7) became the first country in the world to adopt Bitcoin as a legal tender. Supporters of a real-world experiment stated that this will reduce the cost of billions of dollars in commissions from foreign exchange to the country. But critics warn that this may encourage money laundering activities.
The plan is led by the young, charismatic and popular President Nayib Bukele (Nayib Bukele) and aims to save Salvadorans an annual $400 million in remittance commissions, most of which come from the United States.
Last year alone, the amount of remittances to El Salvador was close to 6 billion U.S. dollars, accounting for 23% of its GDP, one of the countries with the highest rate in the world.
Opinion polls show that Salvadorans are skeptical of the use of Bitcoin and are worried about the volatility of cryptocurrencies. Critics say this may increase the regulatory and financial risks of financial institutions. Nevertheless, some residents remain optimistic.
“It will be beneficial…We have family in the United States, they can send money for free, and the bank will charge a fee for sending money from the United States to El Salvador,” said Reina Isabel Aguilar, the owner of El Zonte Beach, located in the capital San Salvador. About 49 kilometers southwest.
El Zonte is part of the so-called Bitcoin Beach, which aims to make the town one of the earliest Bitcoin economies in the world.
Prior to its launch, the government had installed the ATM machine of its Chivo digital wallet, allowing cryptocurrency to be exchanged into U.S. dollars and withdrawn without commission, but Bukele wanted to lower expectations for fast results on Monday and asked for patience.
“Like all innovations, the Bitcoin process in El Salvador has a learning curve. Every road to the future is like this. Not everything can be done in a day or a month,” Booker said on Twitter. He often uses a platform to talk about his achievements or denounce his opponents.
On Monday, El Salvador purchased the first batch of 400 bitcoins, temporarily pushing the price of bitcoins up by 1.49% to more than $52,680. As we all know, cryptocurrencies are highly volatile. Just this spring, it rose by more than $64,000 in April, and it was almost as low as $30,000 in May.
Some analysts worry that the move to make Bitcoin and the U.S. dollar legal tender may disrupt El Salvador’s prospects for seeking a financing agreement with the International Monetary Fund (IMF) for more than $1 billion.
After Bukele’s Bitcoin law was passed, rating agency Moody’s downgraded El Salvador’s credit rating, and the country’s dollar-denominated bonds are also under pressure.
But Booker, who does not shy away from controversy, reposted a video on Monday, which showed that in the scene of Quentin Tarantino’s movie “Django Unchained” (Django Unchained), The faces of actor Jaime Foxx are superimposed on each other. This is a movie about American slavery. The video depicts Bookler whipping a slave trader with the International Monetary Fund logo on his face.
