Use of Bitcoin booms in El Salvador
Use of Bitcoin booms in El Salvador
Bitcoin

Use of Bitcoin booms in El Salvador

By Vincenzo Cacioppoli - 1 Oct 2021

Chevron down
Listen this article
download

It has been just over three weeks since Bitcoin was adopted as legal tender in El Salvador and initial results seem to confirm the success of the initiative with the Central American country’s population.

Bitcoin and the spread of cryptocurrencies in El Salvador

According to the first data to emerge, around 2.7 million Salvadorans (out of a population of around 6.4 million) have moved money to Chivo’s virtual wallet. The country’s president, Nayib Bukele, commented on this data, saying that the wallet now has more users than any single bank in El Salvador. At the same time, in a tweet, the President warned of the risks of the sudden spread of cryptocurrencies.

“Chivo is not a bank, but in less than 3 weeks, it now has more users than any bank in El Salvador and is moving fast to have more users that [sic] ALL BANKS IN EL SALVADOR combined. This is wild!”

This represents the contradiction this decision has sparked in the country and around the world over the choice, which some say was perhaps over-hasty.

The International Monetary Fund has criticized the Salvadoran government’s decision.

The international rating agency S&P has also warned of the risks related to the country’s credit that such a decision could entail.

“The risks associated with the adoption of bitcoin as legal tender in El Salvador seem to outweigh its potential benefits,” S&P said. “There are immediate negative implications for credit”, reads a report from the agency.

There have been demonstrations on the streets in the country, harshly protesting the President for this decision, alleging risks that such a decision could pose for a country in serious economic difficulties like El Salvador.

Bitcoin El Salvador
Over 2.7 million people are using Bitcoin in El Salvador

Pros and cons of Bitcoin adoption in El Salvador

The decision taken by President Bukele on 7 September is bound to be discussed for a long time, considering that the country could be a test case for the cryptocurrency adoption process. 

But beyond the exciting results in terms of the number of users who are using Bitcoin, the first few days have seen both pros and cons.

For days, the state-run wallet Chivo itself has had many technical problems, which have made the service very difficult for users. The country’s Court of Auditors has opened an investigation into the creation of several Bitcoin ATMs with public money.

JP Morgan described El Salvador’s move as “an ill-conceived experiment” and that it could lead to highly volatile prices and problems for the country’s banks.

Following local media reports, many shops still seem sceptical about accepting Bitcoin for payment of goods, while there have already been several cases of some users’ wallets being hacked and their accounts being emptied.

Panama, Ukraine and Bitcoin

In Panama, a bill to make Bitcoin legal is being discussed, the same thing is happening in Ukraine, and in Cuba, where Bitcoin is already widely used on the black market, the legalization of cryptocurrencies has been under consideration for some time.

Despite the difficulties encountered, other countries may soon follow El Salvador’s example.

 

Vincenzo Cacioppoli

Vincenzo was born in Genova but lived most of his life in Milan. He has a degree in political science. He is a journalist, blogger, writer, and marketing and digital advertising expert. After a long experience in traditional marketing, he started working with the web and digital advertising in 2011, creating a company called Le enfants. Passionate about the web and innovation, in 2018 he started exploring the topics related to blockchain technology and cryptocurrencies. Independent cryptocurrency trader since March 2018, he now collaborates with companies in the sector as a content marketing specialist. In his blog. mediateccando.blogspot.com, he has long been primarily focused on blockchain, which he considers to be the greatest technological innovation after the Internet. His first book about blockchain and fintech is scheduled for release in November.

We use cookies to make sure you can have the best experience on our site. If you continue to use this site we will assume that you are happy with it.