El Salvador’s bitcoin adoption didn’t go as smoothly as President Nayib Bukele had predicted.
In its historic move, El Salvador became the first country on September 7th to officially adopt the cryptocurrency as legal tender. However, this nationwide auspicious adoption got off to a bumpy start, with a few technical issues, as well as happening at the same time as a flash crash in the crypto market wiped billions off Bitcoin’s market capitalisation.
To begin with, technological glitches hampered its use while street protests by mistrustful citizens broke out in this Central American country. Bitcoin adoption will lower commission costs for billions of dollars sent from abroad but to which critics warned it may fuel money laundering. Businesses should accept payment in Bitcoin alongside the US dollar, which has been El Salvador’s official currency since 2001 and will remain legal tender.
President Nayib Bukele, who had pushed for adopting the cryptocurrency, stated this move will help Salvadorans save about $400 million, that is spent by the government annually on commissions for remittances while giving access to financial services to the unbanked.
Ahead of the launch, El Salvador had bought 400 Bitcoins, Bukele said, helping drive the currency price above $52,000 (€ 44,000) for the first time since May. But underscoring the risks, hours later on bitcoin had weakened.
To that, President Nayib Bukele confirmed in a tweet that El Salvador had bought 150 more Bitcoin in “the dip” so as to benefit more when the price rose again.
Highlighting Pro’s and con’s on El Salvador’s bitcoin adoption
Moreover, apart from the technical issues, El Salvador faced other kinds of problems as, a small anti-bitcoin law protest broke out in the country. Hundreds of Salvadorians opposed bitcoin adoption as international bodies like The World Banks and The International Monetary Fund (IMF) have also voiced out their worries of recognizing the truly digital currency.
Citizens protest against the use of bitcoin as a form of payment, in El Salvador, 07 September.Hundreds of Salvadorans took to the main streets to demonstrate against the use of bitcoin as a form of payment, after the entry into force of a law that allows the circulation of cryptocurrency together with the US dollar as of today. Economic agents, according to the legislation endorsed by the ruling party in the Legislative Assembly, are obliged to accept cryptocurrency and all prices of products and services must be expressed in dollars and bitcoin.
Not only that, even McDonald’s, the American fast-food empire is now accepting bitcoin payments through Lightning Network.
In the run-up to the launch, the government installed ATMs that will allow bitcoin to be converted into dollars and withdrawn without commission from the Chivo digital wallet.
President Nayib Bukele has asked for patience. He tweeted: “Like all innovations, El Salvador’s Bitcoin process has a learning curve,” Not everything will be achieved in a day, or in a month.”