Street protests, technological failures and a drop in value marked the first day El Salvador adopted bitcoin as legal tender.
Bitcoin price on Tuesday (7/9) fell to its lowest level in almost a month — from US$52,000 (R$274,000) to less than US$43,000 (R$227,000).
An opposition politician said the fall had caused one of Latin America’s poorest countries to lose $3 million.
The launch of bitcoin in El Salvador was not at all what President Nayib Bukele expected when he began his daring experiment.
Contrary to what the government expected, platforms like Apple and Huawei did not offer the government-invented digital wallet known as Chivo. And the servers had to be shut down because they couldn’t handle all requests for user registrations.
But as the day went on, Chivo started to appear on more platforms and was accepted by companies like Starbucks and McDonald’s.
The government distributed US$30 (BRL 158) in bitcoins to each citizen to encourage the adoption of cryptocurrency. And he claims that bitcoin can save the country US$ 400 million (R$ 2.1 billion) a year in transaction fees on funds received from abroad. The country’s economy relies heavily on remittances from abroad.
However, based on data from the World Bank and the government, the BBC estimates that this value is close to US$ 170 million (R$ 900 million).
“We need to break the paradigms of the past,” President Bukele tweeted. “El Salvador has the right to advance towards the first world.”
Merchant Ed Hernandez runs a family store in San Salvador, where customers buy essentials like rice, beans and cleaning products. He is excited about the change.
“During the pandemic, it will be good not to use physical money,” he told the BBC, saying this protects him from customers who pay with counterfeit bills.
However, El Salvador did not have a good first day in its experience with bitcoins, with the sharp drop in the price registered in the markets.
“It was a very bad day for President Bukele, his government and his bitcoin experience,” opposition politician Johnny Wright Sol told the BBC.
“The majority of the population knows very little about cryptocurrencies. What we do know is that it is a very volatile market. Today that has certainly been proven.”
Wright Sol said that bitcoin is not a suitable national currency and that the bill passed hastily, without further discussion: “The Bitcoin Act passed in parliament with almost no debate. It only took about five hours to pass.”
“We don’t hate cryptocurrencies or bitcoin, but we don’t believe it should be mandatory for companies to accept bitcoin as payment. The state is supporting these payments and taking the risk, but in the end we taxpayers are the state. “
Wright Sol is not the only critic. More than a thousand protesters gathered in front of the country’s supreme court, where fireworks were fired and tires burned.
In addition to financial instability, some say the adoption of bitcoin can fuel illicit transactions.
But Hernandez, the retailer, said he was not bothered by the volatility: “I see it as a risk, yes — but like everything else in life, there is a risk. When we have a store, sometimes we buy a product and we can’t resell it. . When others see a crisis, I see an opportunity.”
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