El Salvador, first country in the world to adopt bitcoin which tumbles in stride – archyworldys

El Salvador has been the first country in the world since Tuesday to make bitcoin legal tender alongside the US dollar, an initiative criticized by international financial organizations that began with a computer system crash and a sharp drop in the value of the currency. cryptocurrency, before a slight rebound.

“@chivowallet is not working, we have taken it offline while we are increasing the capacity of the servers,” the popular President Nayib Bukele, who initiated monetary reform despite strong reluctance within the government, wrote on Twitter early Tuesday. population.

The government bought its first 400 coins, with a market value of $ 21 million.

He also launched the “Chivo” (colloquially “Super”) e-wallet needed for day-to-day bitcoin transactions with his mobile phone and offered $ 30 welcome when downloaded.

For the head of state and his government, bitcoin will allow Salvadorians to save $ 400 million in bank charges when sending money by the diaspora, especially in the United States, which represents 22% of GDP. from the country.

But according to recent polls, more than two-thirds of the 6.5 million Salvadorans say they want to continue to use exclusively the US dollar, El Salvador’s legal tender for 20 years.

“We don’t want it,” says Rosa Martha Perez, a 68-year-old peasant woman. Having come to demonstrate with hundreds of people in the center of the capital, she does not see how she will sell her fruits in the bitcoin market. Protesters, under close surveillance by riot police, burned tires on the route to Parliament.

“I do not trust, for three reasons. One, because it is a volatile currency. Two, (bitcoin) lends itself to money laundering. Three, one can become a narco-state”, enumerates Luis Mejillon, 28 years old.

On this first day of bitcoin’s legalization in El Salvador, the sharp drop in its value did not encourage confidence: bitcoin suffered its biggest losses on Tuesday since its plunge in May, wiping out 5,000 dollars in a few minutes. Around 4:15 p.m. GMT the cryptocurrency fell 9% to $ 47,225, wiping out much of its gains in recent weeks, before rebounding slightly.

– “Very low fees”

However in El Zonte where cryptocurrency has been used in everyday life since 2019, Mike Peterson, a 47-year-old Californian surfer living on these beaches on the Salvadoran Pacific coast, defends bitcoin. “A lot of people don’t have access to bank accounts (…) Now they can make online payments, send or receive money with family members and do it all with very low fees or almost non-existent, “he told AFP.

“The goal is to be able to put some aside and, in the long term, if bitcoin rises, I will win,” said Raul Martínez, a 51-year-old worker.

On social media, cryptocurrency supporters bragged about buying burgers or pizza.

Economists, but also the World Bank, the International Monetary Fund (IMF) and the Inter-American Development Bank (IDB) have expressed their skepticism.

This measure will have “a negative impact” on the living conditions of Salvadorans due to the “high volatility of the exchange rate” of bitcoin, and will have an impact “on the prices of goods and services”, according to his colleague from the University of Salvador Oscar Cabrera.

The Salvadoran parliament passed the law in June stating that the value of bitcoin “shall be established freely by the market” and requiring all businesses to “accept bitcoin as a means of payment”.

However, the government leaves the possibility during a transaction with the Chivo electronic wallet to immediately convert the amount into its equivalent in dollars.

“No one is obliged to use” bitcoin, “the dollar is the currency of reference for prices, wages and accounting records in the country”, underlines the government which has allocated 203 million dollars to a fund intended to guarantee the automatic convertibility of bitcoin into US dollars.

Before the appearance of a new currency in their portfolio, Salvadorans were reserved, “not seeing how it will have a positive impact to significantly change their living conditions,” said the director of polls. Central American University (UCA) Laura Andrade.

However, more than 80% of them voted for their 40-year-old president, who interacts a lot on social networks and appears in all circumstances with a cap screwed upside down on his head.

cmm / lbc / dro / roc