El Salvador made history by adopting Bitcoin into its financial system as a new currency. Bitcoin is among the most popular cryptocurrencies being utilized mostly in developed countries and has been adopted in many established corporations which undertake many operations on online platforms. El Salvador decided to bring cryptocurrencies into its system to keep up with the current economic trends to tap into other monetary avenues and safeguard wire transactions.
President Nayib Bukele made a bold decision this month to incorporate Bitcoin as legal tender in his country and posited that it was an experimental move that would bring many advantages to the people. It became the first state to break new ground in that area [Source] and sparked a debate among economists and traders who highlighted the workability of this experiment [Source]. In promoting the use of Bitcoin, the Bukele administration showed serious determination in making the citizens accept the new currency. An amount of $30 was given to everyone who downloaded the government’s digital wallet app called Chivo. “We must break the paradigms of the past. El Salvador has the right to advance towards the first world”, as noted by Bukele.
Millions of people were eager to download the app, and other people were busy buying $30 worth of Bitcoin “as a show of support and to help boost the value of the volatile currency.” Surveys carried out before the adoption of Bitcoin depicted how many people had no idea of how cryptocurrencies work. Uncertainty filled the masses; a Salvadorian taxi driver Daniel Hercules said, “I’ve accepted Bitcoin for about two months since I knew this was coming. I just had someone pay me $40 in Bitcoin for a fare to the airport, but it’s rare. Only around 10% of customers prefer to pay with Bitcoin”.
He was scared of the currency crashed and noted that “It is one of the things that worries me the most. Losing money from long days of work would not be OK.”
Different reactions were seen in relation to digital money [Source]. Jeanette Sandoval, who sells groceries for home delivery with her son, refused to participate in this experiment and argued that “I have always been open to change, but this time I disagree. Our customers say they will not be paying in Bitcoin.” She added that “In my country, there are many people who are illiterate and hardly have a cell phone, not an intelligent one, but one of the old one. They will not use it’ [Source]. Such sentiments are aired out in many communities because “cryptocurrency” seems like heavy jargon for the “ordinary” minds to comprehend and fully understand how it works. In the capital San Salvador, various protests were carried out by citizens who blamed the government for hiding its bad governance behind lavish terms like ‘Bitcoin.’
The legal tender proved to be ‘a step back’ within 24 hours and caused losses in the country’s economic trends. After a day in circulation, the Bitcoin experiment did not perform as expected and trenched most finances. The Chivo digital wallet’s services were not accepted on platforms such as Apple and Huawei, but it was working on some common websites [Source]. According to Bukele’s plans, bitcoin would save the country $400 million a year in transaction fees, especially on funds sent from abroad. Bitcoin fluctuations show that it “went from about $10 000 for a single coin in September 2020 to a high of $63 000 in April 2021 then falling to $30 000 in July this year”. These trends dictate either one gets a profit or loss, and the changes happen without any notice. Bitcoin fell to about 20% on their nation’s first day of circulation.
Opposition politician Johnny Wright Sol cited that “it was a very bad day for President Bukele, his government, and his Bitcoin experiment,” and explained how “The majority of the population knows very little about cryptocurrencies. What we do know is it’s a very volatile market. Today was surely made manifest.”
Mr. Sol despised parliament for passing the bitcoin law too soon and mandating most businesses to get involved.
Since it was dismay on the first day, maybe the Bitcoin value will change and bring the expected fortune to the country of El Salvador.