- Katie Silver
The first day of El Salvador’s official adoption of the digital currency “Bitcoin” in the country witnessed angry protests, technological failures and a sharp decline in the value of the currency.
On Tuesday, the price of Bitcoin fell to its lowest level in nearly a month, from $52,000 to less than $43,000 at one point.
An opposition politician said that the decline cost the country, which is one of the poorest in Latin America, a loss estimated at three million dollars.
The introduction of Bitcoin in El Salvador was far from what the president, Najib Bukele, had envisioned when he began his daring experiment.
Platforms such as “Apple” and “Huawei” did not offer the option of the government-backed digital wallet, known as “Shifu”, and had to activate the offline mode for servers in light of their inability to follow up on user registrations.
However, as the day passed, Shifu’s digital wallet started appearing on more platforms, and it gained acceptance from platforms such as Starbucks and McDonald’s.
The government has given citizens $30 per bitcoin to encourage its adoption, and says bitcoin could save the country $400 million a year in transaction fees on money sent from abroad.
Despite this, using data from the World Bank and the government, the BBC estimates the value at $170 million.
Abu Kila wrote on Twitter: “We must break the models of the past. El Salvador has the right to advance towards the first world.”
Ed Hernandez runs a family store in San Salvador, selling staples like rice, beans and cleaning products.
“During the pandemic, it is better not to use cash in its physical form,” he told the BBC, adding that the move protected him from customers paying with counterfeit notes.
The timing wasn’t right for El Salvador even though Bitcoin faltered on its first day as an official currency, dropping 20 percent at one point.
“It was a very bad day for President Bukele and his government and his experience with Bitcoin,” opposition politician Johnny Wright-Sol told the BBC.
He added, “The majority of the population knows very little about cryptocurrencies. What we do know is that it is a very volatile market. Today it is confirmed.”
Wright Saul said that Bitcoin is not a suitable national currency, and they were quick to adopt it, adding that Parliament “approved the Bitcoin Act without any discussion. It only took about five hours.”
“We don’t hate cryptocurrencies or bitcoin, but we don’t think stores should be required to accept bitcoin for payment,” he added.
“The state supports these payments and takes the risk, but in the end, we are all paying taxes to the state,” he said.
Wright-Saul was not the only opponent of the move, as more than a thousand protesters gathered in front of the country’s Supreme Court, setting off fireworks and burning tires.
In addition to the currency’s financial instability, some say the adoption of Bitcoin may fuel illicit transactions.
But Hernandez, the store owner, does not ignore the vagaries: “Yes, I see that there is a risk, but like everything in life, there is a risk. When we own a store, sometimes we buy a product and not sell it.”
“When others see a crisis, I see an opportunity,” he added.