- Bitcoin has been accepted as legal tender by El Salvador.
- President Nayib Bukele announced that the country had purchased 400 bitcoins.
- Opinion polls show that most people in the country oppose this idea.
El Salvador became the first country in the world to accept Bitcoin as legal tender on Tuesday, despite widespread domestic skepticism and international consumer risk warnings.
President Nayib Bukele’s government claims that this move will give many Salvadorans access to banking services for the first time, saving about $400 million in the cost of repatriating money from abroad each year.
“Tomorrow, for the first time in history, the world’s eyes will be on El Salvador. #Bitcoin did this,” Bukele said on Twitter on Monday.
On Monday night, he announced that El Salvador had purchased the first batch of 400 bitcoins, 200 in each batch, and promised more.
Read | SA public warns against doing business with the world’s largest cryptocurrency exchange
According to data from the cryptocurrency trading application Gemini, the transaction price of these 400 bitcoins is approximately US$21 million.
Recent public opinion polls show that most of El Salvador’s 6.5 million people oppose this idea and will continue to use the country’s legal currency, the U.S. dollar for the past 20 years.
The skeptic Jose Santos Melara, who participated in hundreds of protests in the capital San Salvador last week, stated: “This Bitcoin is a non-existent currency. This currency will not let the poor Benefits will only benefit the rich.”
“If a poor person hardly has enough food, how will they invest (Bitcoin)?”
concern
In June, the Salvadoran Parliament approved a law that allows cryptocurrencies, along with the U.S. dollar, to be accepted as bids for all goods and services in this small Central American country.
The bill is an initiative of Bukele and was approved within 24 hours of being submitted to Congress-since March, the president’s allies have held a majority of seats in Congress.
Experts and regulators have highlighted concerns about the notorious volatility of cryptocurrencies and the lack of any protection for their users.
The government is installing more than 200 Bitcoin teller machines, some of which are guarded by soldiers to prevent possible arson by opponents.
Bukele promised to provide 30 US dollars to every citizen who adopts the currency.
Laura Andrade, director of the Institute of Public Opinion at the University of Central America, stated that “These are decisions made by the government and legislators without consulting the public.” The institute found in a poll , 70% of Salvadorans opposed this move.
She said: “We see that people are not feeling the positive impact of significantly changing their living conditions.”
Nearly two-thirds of Salvadorans surveyed stated that they are not interested in downloading a “Chivo” e-wallet that allows users to buy and use Bitcoin.
Oscar Cabrera, an economist at the University of El Salvador, said that high currency volatility will have a “negative impact” on consumers and affect the prices of goods and services.
The currency fell below $30,000 in June, less than half of the all-time high of over $64,000 two months ago.
Hold the power supply tightly
The Salvadoran Foundation for Economic and Social Development (FUSADE) stated that it is “unconstitutional” to force merchants to accept Bitcoin as a payment method.
Booker is popular but has come under fire in several ways for strengthening his control of power. He accused opponents of trying to “sow fear” among Salvadorans, few of whom have access to formal banking services.
In the dollarized economy, remittances account for more than one-fifth of GDP, mainly through Western Union and other institutions in U.S. dollars, with an estimated 1.5 million foreigners.
According to data from the World Bank, El Salvador received more than $5.9 billion in income from nationals living abroad (mainly in the United States) in 2020.
Economists and international institutions such as the World Bank, the International Monetary Fund and the Inter-American Development Bank have expressed concerns about the adoption of Bitcoin in El Salvador.
Never miss a story. Choose from our newsletter Send the news you want directly to your inbox.
