Bitcoin may be the official currency in El Salvador
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On September 7, the Central American state, which makes up a quarter of Hungary’s territory, made the bitcoin cryptocurrency an official currency in addition to the US dollar. The introduction in El Salvador did not go unnoticed: protests, technological disruptions and the fall in the exchange rate followed the recognition of cryptocurrency as the official currency.
Bitcoin may be the official currency in El Salvador
The groundbreaking idea would fly the Central American state from the financial Middle Ages to space.
The Index wrote in June that Salvador’s president Nayib Bukele had announced that he would make bitcoin an official currency. The change took effect on September 7, requiring all businesses to accept cryptocurrency wherever possible.
THIS IS A PARTICULARLY BOLD MOVE IN A COUNTRY WHERE SEVENTY PERCENT OF THE POPULATION DOES NOT HAVE A BANK ACCOUNT OR CREDIT CARD.
The president of El Salvador hopes the introduction of bitcoin will help repatriate the majority of emigrants to the United States, which otherwise account for more than twenty percent of the country’s GDP, $ 4-6 billion a year.
With the introduction of the cryptocurrency, the government is giving every citizen $ 30 in bitcoin in an attempt to encourage people to use the new currency. However, the introduction encountered several problems. Neither Apple nor Huawei has allowed a government-backed digital wallet on their devices, nor have the servers withstood the burden of many registrations, Reuters reports . Huawei eventually accepted a digital wallet called Chivo, but there were several problems with the servers. Among the multi-companies, McDonald’s and Starbucks were among the first to start accepting virtual money in their stores.
According to the local opposition, the Salvadoran government has accepted, without substantive debate, the making of cryptocurrency as an official currency in a country where the majority of the population knows nothing about virtual money. And the government’s obligation for businesses to accept cryptocurrency imposes serious costs and risks on the economy. On Tuesday, more than a thousand people protested against the introduction of bitcoin in the country’s capital, San Salvador, 444 reported .
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The World Bank has previously criticized and failed to support Bukele’s plan, citing transparency issues and the large environmental footprint of bitcoin production .
On the first day that bitcoin was the official currency in Salvador, the cryptocurrency fell from $ 52,000 at one point to $ 43,000. The fluctuation has caused $ 3 million in damage to the state, according to local opposition politicians. Bukele hopes a significant portion of the world’s $ 680 billion bitcoin assets will migrate to El Salvador in the long run.
The infrastructural background for the introduction of bitcoin was taken over by a small American company, Strike, which is making cryptocurrency transactions smooth with a parallel system (bitcoin lightning network) in a blockchain system that has become somewhat congested in recent years.
The president of El Salvador hopes the introduction of bitcoin will help repatriate the majority of emigrants to the United States, which otherwise account for more than twenty percent of the country’s GDP, $ 4-6 billion a year.
