Bahama Times

Thursday, Mar 28, 2024

El Salvador officially adopts Bitcoin as currency - with a few hiccups

El Salvador officially adopts Bitcoin as currency - with a few hiccups

Skepticism around Bitcoin was not dispelled when Salvadorans couldn't access the country's new digital wallet - or when its price slid.

Bitcoin's price continued to plunge on Wednesday - a day after its heaviest losses in the two and a half months since El Salvador voted to adopt the crypto asset as legal tender - causing angry protests and havoc online.

At one point on Tuesday, the digital currency fell as much as 18.6 per cent, wiping out more than $180 billion (€152 billion) from the market.

The coin last traded at $46,560 (€39,361), having endured a rocky day's trading on Tuesday which saw it hit a near four-month high of $52,956 (€44,769) before then plunging 11.1 per cent, its largest fall since June 2.

In a historic move, El Salvador became the first country on Tuesday to officially adopt the cryptocurrency as legal tender but it got off to a bumpy start.

Technological glitches hampered its use while street protests by mistrustful citizens broke out in the Central American country.

Proponents say the move will lower commission costs for billions of dollars sent from abroad but which critics warned may fuel money laundering.

The change means 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.

A woman protests against the circulation of Bitcoin in San Salvador on September 7, 2021.


President Nayib Bukele, who has pushed for adopting the cryptocurrency, says it will help Salvadorans save about $400 million (€338 million) the government calculates is spent annually on commissions for remittances while giving access to financial services to the unbanked.

Ahead of the launch, El Salvador 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 Tuesday Bitcoin weakened.

In response, 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.


Public skeptical of Bitcoin

Doubters say Bitcoin could increase regulatory and financial risks for the Central American nation, and polls show Salvadorans are wary of the volatility of the cryptocurrency, which can shed hundreds of dollars in value in a day.

To warm up a skeptical public, Bukele has promised every citizen $30 (€25) in Bitcoin if they sign up for a government digital wallet.

In the early hours of Tuesday, El Salvador's national digital wallet, Chivo, had not appeared on Apple Inc, Google and Huawei's app download platforms, however, prompting a series of tweets from Bukele, including one with a red-faced "angry" emoticon.


"Release him! @Apple @Google and @Huawei," Bukele said. The wallet was later available from Huawei.

Some citizens were optimistic.

"It's going to be beneficial ... we have family in the United States and they can send money at no cost, whereas banks charge," said Reina Isabel Aguilar, a store owner in El Zonte Beach, some 49 km southwest of capital San Salvador.

Known as Bitcoin Beach, the town of El Zonte aims to become one of the world's first bitcoin economies. However, uptake may be slowed by low internet penetration across the country. It remains unclear whether businesses will be sanctioned if they do not adopt the new currency.

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.

Bukele on Monday asked for patience.

"Like all innovations, El Salvador's Bitcoin process has a learning curve," he said on Twitter. "Not everything will be achieved in a day, or in a month."

El Salvador's President Nayib Bukele offers a prayer in congress.


Bukele has taken over the levers of power


In barely two years in office, Bukele has taken control of almost all levers of power. Last week, top judges appointed by his lawmakers ruled he could serve a second term.

The 40-year-old president is popular with the public but has been accused of eroding democracy, including by the administration of US President Joe Biden.

Bukele has promised to clean up graft, but the US recently put some of his close allies on a corruption blacklist.

Analysts fear adopting the cryptocurrency could fuel money laundering.

After the bitcoin law was approved, rating agency Moody's downgraded El Salvador's creditworthiness, while the country's dollar-denominated bonds have also come under pressure.

The move has muddied the outlook for El Salvador's quest for more than $1 billion (€843.8 million) in financing from the International Monetary Fund (IMF).

But Bukele, who does not shy away from controversy, on Monday retweeted a video that showed his face superimposed on actor Jaime Foxx's in a scene from Django Unchained, a Quentin Tarantino film about American slavery. The video portrayed Bukele whipping a slave trader who had the IMF emblem emblazoned on his face.

Bukele later deleted the retweet.

In his own tweet, Bukele said: "We must break the paradigms of the past. El Salvador has the right to advance towards the first world".

Newsletter

Related Articles

Bahama Times
0:00
0:00
Close
Paper straws found to contain long-lasting and potentially toxic chemicals - study
FTX's Bankman-Fried headed for jail after judge revokes bail
Blackrock gets half a trillion dollar deal to rebuild Ukraine
Israel: Unprecedented Civil Disobedience Looms as IDF Reservists Protest Judiciary Reform
America's First New Nuclear Reactor in Nearly Seven Years Begins Operations
Southeast Asia moves closer to economic unity with new regional payments system
Today Hunter Biden’s best friend and business associate, Devon Archer, testified that Joe Biden met in Georgetown with Russian Moscow Mayor's Wife Yelena Baturina who later paid Hunter Biden $3.5 million in so called “consulting fees”
Singapore Carries Out First Execution of a Woman in Two Decades Amid Capital Punishment Debate
Google testing journalism AI. We are doing it already 2 years, and without Google biased propoganda and manipulated censorship
Unlike illegal imigrants coming by boats - US Citizens Will Need Visa To Travel To Europe in 2024
Musk announces Twitter name and logo change to X.com
The politician and the journalist lost control and started fighting on live broadcast.
The future of sports
Unveiling the Black Hole: The Mysterious Fate of EU's Aid to Ukraine
Farewell to a Music Titan: Tony Bennett, Renowned Jazz and Pop Vocalist, Passes Away at 96
Alarming Behavior Among Florida's Sharks Raises Concerns Over Possible Cocaine Exposure
Transgender Exclusion in Miss Italy Stirs Controversy Amidst Changing Global Beauty Pageant Landscape
Joe Biden admitted, in his own words, that he delivered what he promised in exchange for the $10 million bribe he received from the Ukraine Oil Company.
TikTok Takes On Spotify And Apple, Launches Own Music Service
Global Trend: Using Anti-Fake News Laws as Censorship Tools - A Deep Dive into Tunisia's Scenario
Arresting Putin During South African Visit Would Equate to War Declaration, Asserts President Ramaphosa
Hacktivist Collective Anonymous Launches 'Project Disclosure' to Unearth Information on UFOs and ETIs
Typo sends millions of US military emails to Russian ally Mali
Server Arrested For Theft After Refusing To Pay A Table's $100 Restaurant Bill When They Dined & Dashed
The Changing Face of Europe: How Mass Migration is Reshaping the Political Landscape
China Urges EU to Clarify Strategic Partnership Amid Trade Tensions
Europe is boiling: Extreme Weather Conditions Prevail Across the Continent
The Last Pour: Anchor Brewing, America's Pioneer Craft Brewer, Closes After 127 Years
Democracy not: EU's Digital Commissioner Considers Shutting Down Social Media Platforms Amid Social Unrest
Sarah Silverman and Renowned Authors Lodge Copyright Infringement Case Against OpenAI and Meta
Italian Court's Controversial Ruling on Sexual Harassment Ignites Uproar
Why Do Tech Executives Support Kennedy Jr.?
The New York Times Announces Closure of its Sports Section in Favor of The Athletic
BBC Anchor Huw Edwards Hospitalized Amid Child Sex Abuse Allegations, Family Confirms
Florida Attorney General requests Meta CEO's testimony on company's platforms' alleged facilitation of illicit activities
The Distorted Mirror of actual approval ratings: Examining the True Threat to Democracy Beyond the Persona of Putin
40,000 child slaves in Congo are forced to work in cobalt mines so we can drive electric cars.
BBC Personalities Rebuke Accusations Amidst Scandal Involving Teen Exploitation
A Swift Disappointment: Why Is Taylor Swift Bypassing Canada on Her Global Tour?
Historic Moment: Edgars Rinkevics, EU's First Openly Gay Head of State, Takes Office as Latvia's President
Bye bye democracy, human rights, freedom: French Cops Can Now Secretly Activate Phone Cameras, Microphones And GPS To Spy On Citizens
The Poor Man With Money, Mark Zuckerberg, Unveils Twitter Replica with Heavy-Handed Censorship: A New Low in Innovation?
Unilever Plummets in a $2.5 Billion Free Fall, to begin with: A Reckoning for Misuse of Corporate Power Against National Interest
Beyond the Blame Game: The Need for Nuanced Perspectives on America's Complex Reality
Twitter Targets Meta: A Tangle of Trade Secrets and Copycat Culture
The Double-Edged Sword of AI: AI is linked to layoffs in industry that created it
US Sanctions on China's Chip Industry Backfire, Prompting Self-Inflicted Blowback
Meta Copy Twitter with New App, Threads
The New French Revolution
BlackRock Bitcoin ETF Application Refiled, Naming Coinbase as ‘Surveillance-Sharing’ Partner
×