Changes of El Salvador
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As the cryptocurrency bitcoin became legal in El Salvador this week, a long line formed on the cash register on the edge of the capital. Those in line were mostly after one thing: the US dollar.
Many waited for the Salvadoran government’s free $ 30 grant to be made into a solid currency, but the donor stopped working. One official admitted that only three people were able to withdraw money from the machine throughout the day.
Francisco Alemán, one of the three lucky ones, was earning incentives collected from various families – though $ 120 had been reduced to $ 118 by the time he earned money because the price of unstable electricity had dropped.
“I think that’s a good thing,” said the 24-year-old student, adding that he thought the technical difficulties were temporary. “People who want to use it just sit there, and those who don’t want it and just want $ 30 won’t do it. Get it right. ”
Under a plan passed in Congress by dictator Nayib Bukele, this week El Salvador will be the first country in the world to adopt bitcoin as a legitimate currency – a bold experiment that is closely monitored by investors and enthusiasts of crypto.
Traders from restaurants and hairdressers now have to accept bitcoin as well as the dollar, which has been El Salvador’s currency since 2001.
As of Tuesday, Salvadorans who download the Chivo digital wallet – the name means “cold” in local sources – can sign up with a country number to receive a bonus, equivalent to about 0.00065 bitcoin. To make a purchase, users sign a QR code to send the payment immediately.
He was described by Bukele as a way to attract money, bring in cheaper remittances and reach out to undocumented migrants – estimated to be 70% of the population – and his government spent more than $ 200m to develop the program, set up a network of savings machines and manage committee committees.
But this has been criticized by economists, the IMF and credit unions, who say it threatens the stability of the economy, putting consumers at risk and exposing the government to major exchanges.
Bitcoin is the most well-known of the thousands of currencies that raise traditional currencies and complex central banks.
However this week to launch digital currency in the United States that has a population of 6.5m has been very smooth, as the program met with the demonstrations and demonstrations that took place in the capital against its establishment.
Although the $ 30 boost was supposed to be spent in stores, many users used the idea that by transferring it to another digital wallet, it could be redeemed by cash – which brings longer lines to cash machines.
International companies operating in El Salvador such as Pizza Hut and Starbucks have now agreed to pay for bitcoin, as did Claro’s mobile phone company. “It’s fine with me – as long as it works,” said Ricardo Mejía, 27, a small business owner who was one of those who sat in line.
Even for a week, take money if the payment method seemed inadequate. One of the largest banks in the country told the Financial Times that less than 0.0001% of their daily transactions were in bitcoin. As of Thursday most supermarkets in the country had not yet taken bitcoin currency.
The government of El Salvador has not responded to a request for comment or to provide statistics on the download or sale using the app.
Many business leaders in the country have been silent on the media, not wanting to be inferior. “We look forward to seeing you,” said an official at a major bank in El Salvador before his death. “We are trying to present this in a very restrained manner.”
The official said the bank had planned a few transactions on bitcoin this week and that it had an agreement with the international exchange to convert them into dollars.
Chivo employees help people use Bitcoin: Salvadorans who download a Chivo digital wallet can register with a country number to receive a bonus © Jose Cabezas / Reuters
Patrick Murray, founder of the El Salvador ecommerce program, Tuyo, criticized the government for wanting companies to accept bitcoin and failing to bring business.
“There are very few people if there are people I have talked to who are opposed to bitcoin per se. “People are against the way things are done in the name of bitcoin,” said Murray, a member of the Grupo Agrisal hotel family. “Such a choice has given us a map for the wrong reasons.”
However, not everyone has such a hope. Among the Salvadoran bitcoin beneficiaries are those who send and receive money – which contributes to El Salvador’s $ 25bn GDP.
Starbucks coffee shops that accept Bitcoin as a payment method in San Salvador. Many business leaders in the country have been silent on the announcement © © Camilo Freedman / Bloomberg
Banks and companies that traditionally transfer money can charge a hefty fine for shipping: more than 10 percent. Bukele said the introduction of bitcoin saves Salvadorans $ 400m in commissions annually.
At a donation center, a family strives to raise money sent to them by relatives in Italy, and they have been waiting for over an hour.
In one line was Kiara Hueso, 27, a beauty retailer who was thrilled to be able to pull out $ 75 sent by her father to the US – without a committee – after two days. “It’s easy and fast,” he shouted.