Oriental Network Longitudinal News Reporter Zhou Anna
Despite much controversy, the small Central American nation of El Salvador has stuck with its previous decision to make Bitcoin the country's legal tender.
Three months ago, the National Assembly of El Salvador voted by an absolute majority to pass the Bitcoin bill submitted by President Bucker. On September 7, local time, the bill officially came into effect, and El Salvador became the first country in the world to adopt Bitcoin as legal tender.
(Pictured: A restaurant in El Salvador accepts bitcoin payments)
However, the move to use Bitcoin as fiat currency did not get off to a smooth start.
On Tuesday, the Salvadoran government had to take the wallet offline for hours after tens of thousands of people tried to download the bitcoin wallet app Chivo and overloaded servers, according to the Financial Times.
Chivo is an e-wallet operated by the Salvadoran government that can use Bitcoin or U.S. dollars to buy goods or payment services. Before the arrival of "Bitcoin Day" (September 7), various media in the country began to promote the use of Chivo wallet, saying that they would provide free $30 worth of bitcoin to local users on the official launch day.
But Bitcoin still ushered in a sharp decline on this day.
On the afternoon of the 7th, the price of Bitcoin fell from $50,000 to a low of $42,830 in more than an hour, a drop of 18.73% during the day, resulting in other cryptocurrencies also being affected by the big fall. Although the price of Bitcoin recovered rapidly after the flash crash, the intraday decline still failed to recover.
The well-known Bitcoin bearish economist Peter Schiff mocked this phenomenon. He tweeted: "El Salvador, welcome to the bitcoin world, your fiat currency lost more than 15% of its purchasing power in one hour. Just get used to it... This time they had to sacrifice a country to make it happen! ”
(Pictured: President Bouquel of El Salvador)
After the collapse of bitcoin, Bukkel tweeted later in the day that the government took advantage of the fall to buy another 150 bitcoins, and the Number of Bitcoins held by the Salvadoran government increased to 550.
According to the report, Bukkel posted a total of 49 tweets on the special tweet that day, more than any other day in the past, which shows how seriously he attaches to the matter.
However, the populace does not seem to be buying it.
In the afternoon, more than a thousand people took part in the protests in the capital, San Salvador. They burned tires outside the Supreme Court, surrounded government agency buildings and confronted police as a way to oppose the state's adoption of bitcoin.
Protesters say the currency is ideal for large investors who want to speculate with their own economic resources, but it is not suitable for ordinary people.
"Most people know very little about cryptocurrencies. What we do know is that this is a very volatile market. Today, this is evident. Protester Saul said.
Some street vendors also said that if someone used Bitcoin to buy something at a stall, "I would tell them I only charge dollars." ”
(Pictured: Salvadoran people protest bitcoin becoming legal tender)
Since the beginning of this year, the price of Bitcoin has fluctuated sharply many times, and the price has risen and fallen by more than half in half a year. For a heavily indebted Salvador, the risks of using it as legal tender are clearly high.
Institutions such as the International Monetary Fund (IMF) have issued successive warnings that the Salvadoran government will take bitcoin seriously, because the decision to make it legal tender may bring a series of risks and regulatory challenges.
An economist emeritus at Johns Hopkins University also noted that bitcoin will cause big problems for El Salvador, whose extreme volatility, corruption potential and uncertainty are just the beginning of a long list of problems.
But many business owners in the country have expressed support for the government's move. They argue that chivo wallets not only broaden payment options for their customers, but also eliminate costs such as credit card fees that banks charge merchants.
"My mother thought Bitcoin was the 'devil's thing,' but it actually had a lot of advantages," said entrepreneur Alba. In his view, the use of Bitcoin is another step towards financial innovation and diversification in the country after adopting the US dollar as the national currency in 2001.
It is reported that in addition to McDonald's, at present, Starbucks, Pizza Hut, these well-known chain restaurant brands in the local stores, have also begun to allow customers to use bitcoin payment.
In addition, in order to promote and popularize the use of bitcoin in the local area, the Salvadoran government is installing more than 200 ATMs with bitcoin exchange functions, which can convert bitcoins in personal digital wallets into US dollars and withdraw them without paying a fee.
(Pictured: A woman withdraws money at a Bitcoin ATM in El Salvador)
Despite the controversy, President Bucker has shown confidence and determination, and he looks forward to giving the country some time.
"As with all innovations, el Salvador's Bitcoin process has a learning curve, and every path in the future is like this, not in a day, a month, but we have to break the paradigm of the past and El Salvador has the right to move towards the first world."