Why does El Salvador marry bitcoin?

7 September 20213 years ago babelfish

Bitcoin legal tender in El Salvador since 7 September, the first country in the world to officially put cryptocurrency on its balance sheet and keep it as a reserve

From today, September 7, bitcoin is the official currency, together with the dollar, of El Salvador. A milestone for cryptocurrency.

The Central American country's bitcoin wallet, known as “chivo”, is launched today September 7, making El Salvador the first nation in the world to make bitcoin one of its national currencies.

El Salvador will give every adult citizen $ 30 in bitcoin, as long as they download and register the Chivo app.

The move by President Nayib Bukele, who hopes to modernize the country's financial system and attract entrepreneurs, forces companies to accept the US dollar (El Salvador's other national currency) and crypto token.

The decision, never experienced before by a country, comes in the midst of a heated debate on the difficulties of implementation.

Economists fear that the effort could expose ordinary people to a roller coaster of volatility and destabilize the economy. Most Salvadorans remain skeptical of the government's choice and distrust digital currency.

While bitcoin's price has recently moved back towards its all-time high of nearly $ 65,000 in April, it suffered a dramatic drop earlier this summer, when it lost more than half of its value. According to various cryptocurrency exchange platforms, the price of bitcoin yesterday exceeded $ 52,000 and remains above $ 51,000.

All the details.

LEGAL COURSE AT THE BITCOIN IN EL SALVADOR

The bitcoin law in El Salvador, which will make the currency legal tender along with the US dollar, was approved in June by parliament and takes effect today, 7 September.

DOWNLOAD THE CHIVO WALLET

The new Chivo app will allow people to trade their bitcoins for US currency or hold bitcoins. The crypto wallet app, already released in the Huawei App Gallery, will soon arrive on iOS and Android and will reportedly be compatible with other bitcoin wallets.

Ya está disponible @chivowallet para todos los que tengan @AppGallery .

Here the link: https://t.co/FS5jKSFFuC

Followed by trabajando para que esté list en @GooglePlay y @AppStore .

– Nayib Bukele (@nayibbukele) September 7, 2021

BUKELE DOES BITCOIN SHOPPING

The president of El Salvador, Nayib Bukele, announced on Twitter the purchase by the state of 200 units of bitcoin, the currency that from today becomes legal tender together with the dollar. This is the first carried out by his government. The president did not provide figures on the disbursement, but the newspaper El Mundo , evaluating the exchange of a bitcoin for 51,767 dollars, reports that the initial investment was equal to 10.3 million dollars.

“El Salvador has just bought its first 200 bitcoins. Our brokers will buy many more ”, tweeted the president in English, adding the hashtag“ #BitcoinDay ”.

"Tomorrow, for the first time in history, all eyes in the world will be on El Salvador," Bukele wrote yesterday in a message posted on his Twitter profile. “Like any novelty, the bitcoin process in El Salvador will have a learning curve. All the roads that lead to the future are like this and it will not come in a day or in a month. But we have to break the paradigms of the past. El Salvador has rights to move towards the first world, ”he added.

El Salvador now holds 400 bitcoins, which are worth nearly $ 21 million at current trading levels. The price per bitcoin was around $ 52,486, up 1.5% in the past 24 hours, according to Coinbase.

THE GOAL OF THE GOVERNMENT

Bukele is convinced of the positive impact of the novelty on the national economy. Bitcoin, he once explained on the network, “has a capitalization of $ 600 billion globally. With this choice, investors and tourists who have bitcoins will come to El Salvador, to the benefit of citizens and the national economy ".

A decision that President Bukele's government has taken, among other things, to incentivize foreign investment, facilitate the sending of remittances – avoiding an estimated loss of up to $ 400 million – and promote domestic consumption.

FROM TODAY, THE SAFEGUARDS PAY IN DOLLARS OR BITCOIN

To this end, the government has started the installation of 200mat to be able to change the digital currency into US dollars that can be spent in cash on the territory. A $ 150 million fund was also opened to support foreign exchange operations. The entry into force of the law will allow Salvadorans to pay for goods and services with bitcoin, right through the application. The merchant may in turn decide to convert the earnings immediately into dollars.

THE REACTIONS

The decision is the subject of heated internal debate, much criticized by opponents and defined as unpopular by several polls conducted in recent weeks. A refusal also linked to the uncertainty that accompanies the debut of a measure strongly defended by the government. In recent days, however, the promotions launched on the network by two commercial establishments have made a noise, ready to take advantage of one of the benefits promised by the executive.

The initiatives, promoted by a bar and a night center, aim to spend the $ 30 bonus in bitcoins in their premises that every Salvadoran should now be in the "Chivo Wallet", the mobile phone application that acts as a wallet virtual that will make its debut today.

Promotions quickly made their way onto the net, intriguing a fairly cautious audience up to now. The hope of the executive is to reply to the doubts of the analysts, among other things aimed precisely at the bonus, a "gift" that according to some dates the government could pay with heavy burdens on public debt.

BUT WAGES AND PENSIONS ONLY IN DOLLARS

However, President Bukele assured Salvadorans that wages and pensions would still be paid in US dollars, not bitcoin.

“Dollar bank accounts will not be converted to Bitcoin, like when we got dollarization and our settler bank accounts were converted to dollars. In this case it will not be so. The dollar accounts will continue to be in dollars, ”Bukele said.

THE SOCIAL CAMPAIGN IN FAVOR OF BITCOIN

Finally, according to Bloomberg , numerous posts on Reddit and Twitter have invited cryptocurrency enthusiasts to buy bitcoins worth $ 30, echoing previous online campaigns targeting titles like GameStop.

THE COMMENT OF THE ANALYSTS

"Bitcoin is not really designed to be a medium of exchange, so this is a first experiment for the currency," Philip Gradwell, chief economist of the Chainalysis data platform, told CNBC's "Capital Connection".

"I think the main use in El Salvador will really be about remittances and the people who use it to save some wealth and maybe just to compete a little with the dollar in the country."

This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/innovazione/perche-el-salvador-sposa-il-bitcoin/ on Tue, 07 Sep 2021 09:37:18 +0000.