El Salvador Becomes the First Country To Adopt Bitcoin As Official Currency

El Salvador Bitcoin BELatina Latinx
Photo courtesy of Forbes.

After the COVID-19 pandemic, the few remaining limitations to the digital world seem to have disappeared, including the conquest of cryptocurrencies.

The definitive step seems to have been El Salvador’s decision to transform Bitcoin into the official currency, being the first country in the world to do so.

However, as evolved as President Nayib Bukele’s decision seemed to be, the reality of bringing the heaviest digital currency into the real world seems destined for chaos.

In announcing his move, Bukele claimed that the digital currency would help Salvadorans save an estimated “$400 million,” which the government estimates is spent annually on remittance fees, NBC News explained.

The government made the Chivo digital wallet available to citizens, claiming it would be available on the App Store and Google Play shortly before noon local time on Tuesday. The president promised $30 worth of bitcoin for each user.

But just hours after the announcement, Salvadorans found that the major app stores did not have the digital wallet available. Bukele said the government had temporarily pulled the plug on it in order to connect more servers to cope with the demand.

Bukele blamed the app download platforms of Apple Inc, Alphabet’s Google, and Huawei for the delay.

Beyond the organizational chaos, Bitcoin adoption is a dangerous experiment. The change means businesses will have to accept payment in bitcoin alongside the U.S. dollar, which has been El Salvador’s official currency since 2001 and will remain legal tender, NBC continued.

The government on Tuesday bought an additional 150 bitcoins, worth about $7 million, and Mcdonald’s began accepting the cryptocurrency at its restaurants in El Salvador.

But in a country where nearly half the population has no access to the internet or technology, adopting a cryptocurrency is a sentence to poverty for many already burdened by violence and precariousness.

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

And it only took one day to have proof: the price of Bitcoin plummeted on Tuesday to its lowest level in nearly a month, falling from $52,000 to less than $43,000 at one point, the BBC explained.

Similarly, more than 1,000 demonstrators gathered outside the country’s Supreme Court this week, where they set off fireworks and burned tires in protest of the digital currency’s adoption.

Analysts also fear that the adoption of cryptocurrency could fuel money laundering in a country with serious government corruption and organized crime problems.