One month ago El Salvador made bitcoin legal tender in the country. The Motley Fool looks at how it’s playing out:
Even before the launch, President Bukele’s push for Bitcoin was not popular at home or abroad. The IMF refused to help fund the rollout, warning of “macroeconomic, financial, and legal issues.” And Salvadorians took to the streets to protest the Bitcoin project before and after the launch. One Central American University survey showed that 68% of people did not agree with the move.
The first stumbling block in El Salvador’s Bitcoin experiment was that the price of Bitcoin fell 11% on the first day, and further in the days that followed. Crypto investors may be familiar with Bitcoin’s volatility. But for many El Salvadorians, who’d each been given $30 worth of Bitcoin (about 0.00065 BTC) only to see its value tumble, it was another matter… In the U.S., Bitcoin is widely seen as a store of value — an investment that people hope will appreciate over time. But El Salvador is using it as a currency. And as a currency, Bitcoin’s volatility is problematic, especially in a low-income country. According to Bloomberg, 1 in 4 Salvadorians make less than $5.50 per day.
Even in a higher-income country, it would be difficult for a company to accept payments in a currency that might rapidly shrink in value in a matter of weeks. Unless the business could transfer the money immediately into dollars (which is what happens with many crypto payments), it would play havoc with things like payroll, rent, and other obligations. This is exponentially harder to manage for a family with little cash to spare.
El Salvador also experienced technical glitches in both its bitcoin ATMs and the state-run wallet, according to the article.
“It is a real shame that the El Salvadorian government rushed into launching Bitcoin as legal tender without first building the technical infrastructure and popular support that would have helped its ambitious scheme.
“Nonetheless, if we check in again in a year’s time, there’s still a chance we’ll see a different story.”
of this story at Slashdot.
Source:: Slashdot