More than half of Salvadorans reject Bitcoin

Study presented by the UFG revealed that the population mistrusts the cryptocurrency.

52.1% of Salvadorans do not agree on the use of Bitcoin and another 30% do not trust the cryptocurrency,

According to data from a survey revealed yesterday by the Francisco Gavidia University, two months after the Bitcoin Law enters into force.

The survey: “Salvadorans think about the Bitcoin Law: Do they accept and receive?” It was carried out by the Disruptiva magazine and the Institute of Science, Technology and Innovation (ICTI), both units of said university.

Oscar Picardo, director of the ICTI, explained that the data reflected in the question: “Do you trust the criteria of President Bukele in this decision to adopt Bitcoin?” are key to understanding that not only do people distrust and reject Bitcoin, but that Bukele has lost popularity.

Can read: This is ECLAC’s warning about Bitcoin in El Salvador

“The study itself reveals that 3 out of 10 people have lost confidence in the president who until this date had a very wide popularity,” said Picardo.

The data collection was carried out from July 1 to 4 of this year with 1,233 effective ballots nationwide and has a 95% confidence level; was made with a view to the entry into force of the Bitcoin Law on September 9.

The study revealed very important data, since two months before the regulations come into effect, 68.4% said they did not know the Bitcoin Law; 21.9% know a little about it and only 9.6% said they know it.

Furthermore, 53.5% of Salvadorans consider that Bukele’s decision to establish Bitcoin as legal tender was a mistake; 24% answered that it was not very correct; 12% believe that it was correct and only 6.5% considered that it was very successful.

Salvadorans are not only unaware of the Law, but of the cryptocurrency itself and its value.

To the question: How much do you know about Bitcoin ?, 48.2% said something, 46% said nothing and 4.6% said a lot.

The survey: “Salvadorans think about the Bitcoin Law: Do they accept and receive?” It was carried out by the Disruptiva magazine and the Institute of Science, Technology and Innovation (ICTI), both units of said university. Photo EDH / Archive

Another question was: “In this week, how much is a Bitcoin worth in its dollar equivalent?” and 71.3% indicated not knowing; 18.2% answered that close to $ 30,000 (which is the real value that the cryptocurrency had in that week); 4.7% said its value is equal to a dollar and 3% said that it was close to $ 100.

A very sensitive issue for the population is their salary or income, so they were asked: Would you be willing to receive your salary or income in Bitcoin? and 64.8% answered that they are not willing; 16.5% are willing; and 18.7% do not know or did not respond.

When consulting the public, which currency do you value for the financial stability of your family economy? 95% said that the dollar, only 1% answered that Bitcoin; 3.2% responded that another currency, and 0.8% said they did not know or did not respond.

In addition, 83.4% indicated that they do not know any family member or friend who has made transactions in cryptocurrencies or Bitcoin; only 16.1% said yes and 0.5% said they did not know or did not respond.

Traders reject Bitcoin

The study also inquired about the opinion of merchants, since the Bitcoin Law obliges this sector to accept cryptocurrencies.

Did you know that once the new Bitcoin law takes effect, on September 9, businesses will be obliged to accept these cryptocurrencies? They were consulted and 61% said they knew, 38% did not know and 9 % answered not knowing or did not answer.

Of the respondents, 280 people were merchants and they were asked if they would be willing to accept payments in Bitcoin, but 67.14% said they would not receive it; 24.29% that would receive it; 3.93 said that they are indifferent and 4.64% that they do not know or did not respond.

“It is important to see at this point how the rejection of Bitcoin is marked,” commented the ICTI director.

Read also: El Salvador’s economy recovers from 2020 thanks to remittances and exports

On June 24 during a national chain, Bukele spoke about the difference between accepting and receiving Bitcoin. To find out if the population is clear about the message, they were asked if they understood the difference. 20% answered that they did not understand; 33.9% assured that they did understand, but 44.7% did not see the chain and 0.6% did not know or did not respond.

In that same chain, Bukele explained how to use the wallet or electronic wallet on his mobile phone and they asked citizens what is their assessment? 24.7% said it is easy to use; the 28.4 stated that it is very complicated; 44.4% assured that they did not see the national network and 2.5% said they did not know or did not respond.

Another important fact that the survey revealed is that merchants consider that the economic situation will worsen with the implementation of the Bitcoin Law, since 43.6% said that the situation could get worse; the 25.6% that will improve the economy; 17% that everything will remain the same and 13.1% said they do not know.

Those favored with the Bitcoin Law

40% of the population assured that the Bitcoin Law favors large entrepreneurs; 14.8% indicated that foreign businessmen; 13.1% to the country in general; 11.2% said that to government finances; 8.5% said they do not know and 6.5% said that Bukele’s family.

32.7% considered that Bukele’s motivation to adopt Bitcoin as legal tender was due to personal and / or business interests; 24.7% mentioned that to improve the family economy and generate more jobs; while 18.5% said that to facilitate transactions such as purchases and remittances; 10% to evade economic sanctions and 13.6% said they do not know.

Finally, when consulting the population, how do you feel about this decision to implement Bitcoin as legal tender? 48% said with uncertainty; 29% with fear; 19.8% optimistic and 2.6% do not know.

On June 24, President Bukele announced the Chivo application that will be used to make transactions with dollars and Bitcoins. Photo: Twitter / Press Secretary of the Presidency

For Picardo, these results are only a reflection of a decision that was made without technical debate.

“The mandatory factor is what put the result of this bet in check; Maybe if the law had given a one-year period for adaptation, for progressive implementation, and after that year the law had been reformed, it would have been different, so I think it was a false step and there is a marked rejection, ”explained Picardo.

The analyst added that we must not forget that there is a digital divide and that it complicates the population to become familiar with this type of digital products.

“There is the digital divide, not everyone has internet, not everyone has equipment, not everyone has a bank account, there are many gaps associated with the problem,” he said.

At this point, the survey revealed that 23.5% have no way to connect; 24% stated that they did not have access to the internet 24 hours a day, seven days a week.

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New cryptocurrency baby doge doubles in price in a day after Elon Musk tweet | TODAY | DW

The price of baby doge – a derivation of dogecoin – soared after a tweet from Tesla and SpaceX boss Elon Musk. “Baby Doge, doo, doo, doo, doo,” Musk tweeted Thursday, referring to the well-known nursery rhyme “Baby Shark.” The hashtag #babydoge was a trend on the web after the tweet.

According to data from CoinGecko, the price of the c coin more than doubled and rose to $ 0.000000002000 from $ 0.000000000916 after the tweet.

An hour earlier, Musk had tweeted a meme – a picture of Marlon Brando from the iconic movie The Godfather – and said “Free the Doge!”

Cryptocurrencies dogecoin and baby doge

Dogecoin started as a joke in 2013 and has since become a major digital asset, according to Business Insider. Baby doge, meanwhile, is one month old, according to the project’s social media account.

Baby doge is a sequel to the larger dogecoin project. The baby version aims to be faster, “hyper deflating” and has a built-in betting system for users to win more coins, as reported Yahoo!Finance.

The developers of baby doge claim that it is the best community currency in the world. Baby doge, according to its creators, offers a higher transaction speed at a lower cost than its “father” dogecoin.

FEW (Business Insider, Yahoo!Finance)

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Scammers created a Bitcoins wallet and disappeared with $ 3.6 billion from investors in South Africa

Despite the huge theft of money in Bitcoins, the South African authorities cannot solve the case because the cryptocurrency is decentralized and no institution has control over it.

A new case of scam around Bitcoin has been known in recent days. On this occasion, the one involved is a company that was founded by two brothers in South Africa and goes by the name of Africrypt.

According to the newspaper Clarín, those responsible for the scam are two brothers identified as Ameer and Raees Cajee, who founded the cryptocurrency company in 2019 and had generated mistrust among their investment community for two months, when Africrypt stopped working.

You can read: App “Chivo” to receive Bitcoin puts personal data of users at risk

At that time, when its users began to complain and suspicions were raised, the brothers called for calm and affirmed that it was all because the company had been the victim of a hack.

Days after the alleged hack, the brothers disappeared with $ 3.6 billion that users of the Cape Town-based company had invested in Bitcoins.

Before disappearing, Ameer and Raees had asked their investors not to take legal action, while vowing that the situation would be resolved.

The scam committed by the Cajee brothers could be the largest in the short history of Bitcoin. Illustrative and non-commercial image / https://twitter.com/AfricaStoryLive/status/1408117635481485318/photo/1

According to media specialized in Bitcoin and other cryptocurrencies, the scam committed by the brothers could be the largest in the short history of virtual money.

When the brothers stopped responding to messages, many of the investors decided to hire companies like Hanekom Attorneys, to investigate what was happening.

Researchers managed to find what investors feared the most: their Bitcoins funds ceased to exist.

Read also: Record in seizure. UK seizes $ 160 million in Bitcoin used in money laundering

According to the information that was collected, the billions of dollars from investors were extracted from their digital portfolios, fragmented through “mixers” on the “dark web” and, from there, deposited them in hundreds of bank accounts always in South Africa, so tracking the money became impossible.

The seriousness of the situation, according to the researchers, is that because it is a decentralized cryptocurrency and without links with intermediaries such as banks or government institutions, solving the case is almost impossible, because the financial authorities of the African country simply do not have jurisdiction about the case.

One of the clues found by Hanekom Attorneys is that the brothers may have fled to England, however, their location is still a mystery.

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Scammers created a Bitcoins wallet and disappeared with $ 3.6 billion from investors in South Africa

Despite the huge theft of money in Bitcoins, the South African authorities cannot solve the case because the cryptocurrency is decentralized and no institution has control over it.

A new case of scam around Bitcoin has been known in recent days. On this occasion, the one involved is a company that was founded by two brothers in South Africa and goes by the name of Africrypt.

According to the newspaper Clarín, those responsible for the scam are two brothers identified as Ameer and Raees Cajee, who founded the cryptocurrency company in 2019 and had generated mistrust among their investment community for two months, when Africrypt stopped working.

You can read: App “Chivo” to receive Bitcoin puts personal data of users at risk

At that time, when its users began to complain and suspicions were raised, the brothers called for calm and affirmed that it was all because the company had been the victim of a hack.

Days after the alleged hack, the brothers disappeared with $ 3.6 billion that users of the Cape Town-based company had invested in Bitcoins.

Before disappearing, Ameer and Raees had asked their investors not to take legal action, while vowing that the situation would be resolved.

The scam committed by the Cajee brothers could be the largest in the short history of Bitcoin. Illustrative and non-commercial image / https://twitter.com/AfricaStoryLive/status/1408117635481485318/photo/1

According to media specialized in Bitcoin and other cryptocurrencies, the scam committed by the brothers could be the largest in the short history of virtual money.

When the brothers stopped responding to messages, many of the investors decided to hire companies like Hanekom Attorneys, to investigate what was happening.

Researchers managed to find what investors feared the most: their Bitcoins funds ceased to exist.

Read also: Record in seizure. UK seizes $ 160 million in Bitcoin used in money laundering

According to the information that was collected, the billions of dollars from investors were extracted from their digital portfolios, fragmented through “mixers” on the “dark web” and, from there, deposited them in hundreds of bank accounts always in South Africa, so tracking the money became impossible.

The seriousness of the situation, according to the researchers, is that because it is a decentralized cryptocurrency and without links with intermediaries such as banks or government institutions, solving the case is almost impossible, because the financial authorities of the African country simply do not have jurisdiction about the case.

One of the clues found by Hanekom Attorneys is that the brothers may have fled to England, however, their location is still a mystery.

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App “Chivo” to receive Bitcoin puts personal data of users at risk

Computer science and data protection experts consider that the wallet developed by the government must have several requirements to guarantee the security of personal data. Cybercrime or identity theft are some of the risks.

“Nobody has to receive Bitcoins if they do not want them,” said the President of the Republic, Nayib Bukele, during the national chain on the cryptocurrency broadcast on the night of Thursday, June 24.

In this chain, the president announced a new mobile application that will serve as a virtual wallet (or wallet, in English) to be able to carry out transactions with Bitcoin, the recently legalized cryptocurrency that will be adopted in the country in September. The main question is what the implementation of this app implies.

You can read: Application “Chivo” goes against the philosophy of Bitcoin, according to computer experts

The aspect that has raised the most doubts around the “Chivo” wallet, which will be developed, administered and controlled by the Government, is the issue related to the personal data that it will collect from each of the users, who will have to provide their biometric data such as facial recognition, as well as the Unique Identity Document (DUI) number. This, in a country where a proposal for a Personal Data Law was recently rejected that protects people from having their data used incorrectly or without their consent.

“Biometric data is too invasive,” says the president of the Transparency, Social Comptroller and Open Data Association (Tracoda), Carlos Palomo, who told El Diario de Hoy that it is “striking” to try to use this type of technology because, in In theory, the app should not ask for more information than is strictly necessary.

Bukele announced a $ 30 incentive for Salvadorans to register for the “Chivo” App. Photo: Twitter / Press Secretary of the Presidency

The risks it could contain

Cybercrime, identity theft and the possibility that our data may be used improperly are some of the risks pointed out by the lawyer Laura Hernández, an expert in data protection. In his opinion, something that generates greater concern is that in the country “there is no regulatory framework on the use of data.”

According to Hernández, the Bitcoin Law has been prioritized over another that is extremely important, the Personal Data Law, which was recently filed by the new Legislative Assembly, and which could have come to prevent the risks involved in the use of an app like the one the government intends to implement.

“We focus a lot on technological solutionism,” says the lawyer, who asserts that important aspects such as the human rights of the people who will use the platform were not taken in the construction of the law, as she does not consider it to be an effective solution. or inclusive.

It may interest you: Government will allocate $ 120 million for Bitcoin users, without detailing item

Likewise, Hernández concludes that in the absence of this law, Salvadorans who are victims of illicit activities that include the mishandling of their personal and biometric data would be practically unprotected.

It would be very easy “to be victims of violations in the environment in which the app works”, as well as the possibility that it has excessive permissions and enters personal files such as photographs, calls, contacts, activate the camera or geolocation, something that it would make it easier for “cybercriminals” to even create false profiles and commit crimes with our data, identity and resources, the expert warns.

Other security considerations

James Humberstone, a Computer Science engineer with a master’s degree in Applied Informatics, affirms that Chivo must, almost by default, comply with minimum security requirements that guarantee that the data of Salvadorans is protected. However, Palomo points out that “we still don’t know what security measures are going to be used.”

This is because, at the moment, the knowledge about said application is quite limited, because only basic characteristics of it were presented, but not technical aspects such as the security mechanisms that it will include in its development and implementation, something that According to Palomo, it should be presented in a document where everything related to this wallet is transparent, as well as its source code.

That is why Humberstone considers that the app should include more authentication and authorization elements in addition to the registration of the user’s face and their DUI number, that is, use other elements such as the fingerprint or the use of tokens to confirm transactions, with in order to minimize risks.

On the other hand, this computer expert affirms that one of the risks of the app is that many users will use it in public WI-FI connections, so that transactions and operations could be at the mercy of third parties to be able to place some malicious code that leads to identity theft or, in the worst case, of the funds contained in the wallet.

This vulnerability, according to Humberstone, lies in the fact that when developing an app whose purpose is massive use, “they sacrifice security to increase people’s usability” and that, in the first instance, is a fairly obvious vulnerability.

Experts affirm that one of the risks would be in the public internet connections to which the app connects when carrying out different transactions. Image from Twitter / @PresidenciaSV

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Bitcoin: What is the “death cross” and why are cryptocurrency investors concerned?

Only on Tuesday, the value of the virtual currency reached close to $ 29 thousand and, although hours later it managed to recover to close to $ 32 thousand, the situation caused something that investors call “cross” or “death cross”. What is it?

With the new fall in the value of Bitcoin in recent days, investors are scared by what means a loss of more than 50% of the maximum value that the cryptocurrency reached last April, when it was worth $ 64,800.

Only yesterday, the value of the virtual currency reached close to $ 29,000 and, although hours later it managed to recover to close to $ 32,000, the situation caused something that investors call a “cross” or “death cross”.

Can read: Bitcoin Fails All Its Objectives As A Currency And Its Value Will Fall To Zero, Says Former Stock Trader Nassim Taleb

According to the BBC Mundo newspaper, this phenomenon is born from a technical analysis that investors and economists carry out on the different currencies, especially digital ones, in which their behavior in specific periods of time is studied.

For example, in the case of Bitcoin, this phenomenon was generated because the average price of the cryptocurrency in the last 50 days fell below the average price of the last 200, giving way to a more catastrophic forecast in financial terms, hence the name “sinister.”

This cross, also known as a “moving average”, according to the BBC, can turn into cloudy or unfavorable forecasts for those who are dedicated to analyzing or speculating on the behavior and value of Bitcoin.

The phenomenon of the death cross has investors worried. Photo: AFP

“It is very bad that there is a death cross because in the end what you have is a confirmation that the long-term trend is down,” can be read in one of the statements given to the BBC by Hugo Osorio , who is Deputy Manager of Strategies and Investment for a company called Falcom Asset Manager, dedicated to the financial services business.

He also points out that this cross is a kind of prophecy that, in general, makes people who have investments in the digital currency choose to sell them because there is an obvious downward trend.

The phenomenon of the death cross is not a superficial analysis, according to the BBC, since investors use several variables to trace that trajectory and behavior that the currency has brought and with which it will continue in the coming days.

Also read: Bitcoin exchange house will charge between 2% and 4% commission, company will start operations in El Salvador at the end of the month

That said, it also points out that a very important aspect that has influenced the collapse of the value of the currency recently adopted in El Salvador was the decision of the People’s Bank of China, which prohibited all Chinese banks and payment platforms from participating. in any type of activities related to Bitcoin and other virtual currencies.

Likewise, days before he had already ordered the closure of several centers that functioned as “Bitcoin mining” -the same that represent around 80% of cryptocurrency mining in the world- for alleged environmental reasons, at the same time that he ordered the companies of electricity to suspend the supply of electricity to these centers, where thousands of computers with high capacity and consumption of energy resources operated.

In addition to the environmental issue, the closure of the mines is also due to China’s intention to end the financial risks that arise as a result of speculation; For this reason, and as with Elon Musk’s tweet at the beginning of May, the price of the cryptocurrency fell precipitously causing panic among the bitcoin community around the world.

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Company founded by Brock Pierce, Bitcoiner, was investigated for hiding losses of $ 800 million

The businessman calling himself “head of the delegation of Bitcoin ambassadors in El Salvador” has been questioned for co-founding the company Tether, creator of a cryptocurrency that has been investigated for fraud in New York.

Brock Pierce has become the representative face of Bitcoin investors who have come to El Salvador in recent days, having been received at the Presidential House along with other bitcoiners.

However, in Pierce’s history in the world of cryptocurrencies it is recorded that the company he co-founded in 2014, called Tether, was investigated in July 2020 by the authorities of New York for having withheld information about $ 800 million in losses.

Can read: Who is Brock Pierce, the businessman who calls himself a “Bitcoin ambassador” and who visited El Salvador a few days ago?

According to Bloomberg on that occasion, Pierce himself recognized that the Tether, also known as digital synthetic dollars (USDT), is “one of the most risky businesses”, despite having been presented as a more stable alternative compared to the others. cryptocurrencies, for having a supposed backing of $ 1 for each Tether, however, the company’s attorney later said that a Tether was actually backed for $ 0.74.

Based on these irregularities, they began investigations of the company, in which it was possible to verify that the company did not have real financial backing, so Tether used an entity established in Panama to process user withdrawals and deposits.

It may interest you: This is how Strike would get the dollars from El Salvador through Bitcoin

This entity, according to Forbes magazine, received $ 850 in concept of a fund called Tether Holding, which would be to support the value of the cryptocurrency through credits that the fund issued to third parties and that were receivable.

Even so, and despite the investigations into the company, Brock Pierce affirmed that he left the company since 2015.

Brock Pierce met at the Presidential House with other Bitcoin investors. Illustrative and non-commercial image / https://twitter.com/brockpierce/status/1405227193161207815/photo/2

With an acting career as a child, the bitcoiner investor has participated in different technology companies and, in 2018, he was named by Forbes magazine as one of the richest people in the world of cryptocurrencies.

During his visit to CAPRES, Pierce said he was honored to “lead the official delegation of Bitcoin ambassadors in El Salvador”, despite the fact that the main characteristic of the cryptocurrency is its decentralized quality, adding that they came to the country to “educate the Salvadoran government on issues such as Bitcoin, Blockchain and technology to create a brighter future in the country ”.

For their part, several Salvadorans on social networks have questioned the visit of the self-styled “Bitcoin ambassadors”, above all, because “they are people who want to take advantage”, as one user wrote on Twitter.

Also read: What does it mean that there are 3 legal currencies in El Salvador?

Also, another user wrote: “Be careful with @brockpierce, Mr. President. For many of us in the Bitcoin community… it is not to be trusted. “

Likewise, according to the Bitcoin Newspaper, a medium specialized in news about cryptocurrency, published a note in which it records the rejection that the international Bitcoin community feels towards the figure of the businessman, especially due to the questions about calling himself the leader of “the delegation of bitcoiners ”, because according to many cryptocurrency enthusiasts“ nobody chose him for it.

“Who chose you out of all the people to represent Bitcoin?”, A Twitter user, to which Pierce replied that he was chosen by “a majority” of the organizations that “built the Bitcoin industry between 2012 and 2014.

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“Of the $ 20 I put in, they only gave me $ 13”: Youtuber Uncle Frank shared his experience buying Bitcoins

(VIDEO) The Salvadoran youtuber shared his experience when converting dollars to Bitcoins and vice versa, where he had to pay up to 10.5% commission plus a very high extra fixed charge to make use of the cryptocurrency.

The popular Salvadoran youtuber, Tío Frank, went to the beaches of El Zonte and El Tunco, in La Libertad, to see first-hand how transactions with Bitcoins work, the cryptocurrency that El Salvador recently adopted as legal tender .

In the images shared by the same youtuber, it is possible to observe how he and a companion arrive at one of the ATMs that have been installed in El Zonte, and which works to withdraw or deposit money directly into the virtual wallet.

You can read: What does it imply that there are 3 legal currencies in El Salvador?

The first steps that Uncle Frank takes in his experience are to install the Bitcoin Beach Wallet application and register through a personal account, from there, a user of the place tells him how he can do to introduce money, something that is equivalent to to buy fractions of Bitcoin.

To do the test, the youtuber scans a QR code, then the account status appears on the screen, that is, how much money you have in your virtual wallet both in dollars and BTC (short for Bitcoin).

At this moment, the young man introduces a $ 20 bill that, once registered by the cashier, shows him on the screen how much it is equivalent in BTC, at the same time that he indicates that there is a fixed charge of $ 5 for converting that physical money into cryptocurrencies.

The ATM shows the fixed charge for each transaction when converting physical money to Bitcoins. Illustrative and non-commercial image / https://www.youtube.com/watch?v=AMpxrgLLb9E

Likewise, while the youtuber waits for the cashier to issue the receipt that proves his purchase, Uncle Frank clarifies that, despite the high value of Bitcoin in the market, it is possible to buy it in fractions, as in his case he acquired 0.0003399 BTC with $ 20.00

Also read: Approving the use of Bitcoin has been a “stupidity” of the Bukele government, says US economist.

However, and to the surprise of the young man, when obtaining his receipt, the real charge he received for the transaction and the conversion of dollars to BTC can be observed, in which it appears that, in addition to the $ 5.00, 10.5% has been discounted. commission for the procedure.

By making accounts and checking his virtual wallet, Uncle Frank checks that the actual amount he has obtained in BTC is equivalent to $ 13.56, that is, $ 6.44 less than the value he paid for Bitcoins.

Uncle Frank shows on a receipt that he was charged $ 6.44 in commission for buying $ 20 worth of BTC. Illustrative and non-commercial image / https://www.youtube.com/watch?v=AMpxrgLLb9E

However, both the youtuber and the person who explains how the ATM works mention that the high cost of the transaction could be due to the fact that the ATM is private and that, probably, it is the owner who charges an extra commission for converting dollars to BTC.

Likewise, Uncle Frank’s companion affirms that he prefers to use traditional ATMs, because they are more practical to use and “without much flow”.

In the same video, the youtuber decides to check the cost of transactions at the Athena ATMs, located in El Zonte, where, as you can see, the commission charge is lower, but the procedure is more cumbersome.

It may interest you: This is how Strike would get the dollars from El Salvador through Bitcoin

For example, to be able to convert BTC to dollars, the user must scan a QR code, then they must wait five minutes to receive a code on the phone, then that code must be entered at the ATM, which will give them a ticket; Then, you must enter the phone number, to receive a second code that will be used to continue with the operation and, finally, you must enter another code that appears on the receipt before received and with this withdraw the money requested at the beginning of the operation.

Some of the users who commented on the video posted by Uncle Frank, stated that the commission charges are too high and that they will only generate losses in the population. Others added that if Tío Frank and his friend, who are “bugs”, find it difficult to understand the procedure, it will be more difficult with the majority of the Salvadoran population, especially merchants and entrepreneurs.

After several minutes, the youtuber was able to withdraw $ 10 from an ATM that converts BTC to dollars. Illustrative and non-commercial image / https://www.youtube.com/watch?v=AMpxrgLLb9E

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BCR President Admits Cryptocurrency Bitcoin Has “Pretty High Volatility”

The official assured that the use of the bitcoin system as legal tender will not be mandatory in the country.

The president of the Central Reserve Bank, Douglas Rodríguez, admitted in a television interview with the state channel that the cryptocurrency Bitcoin is very volatile, so its value does not last over time.

“Volatility in Bitcoin does exist, there is quite high volatility, but that also happens even in the dollar until the best currencies there is also volatility, there is this effect that it can go down or it can go up, it is not necessarily going to stagnate,” he admitted. Rodriguez.

The use of Bitcoin is not regulated in any country in the world, since there is no financial regulation for cryptocurrencies, however Rodríguez assures that the intention of President Nayib Bukele is to regulate it.

SEE ALSO: Bukele government plans to maintain a relationship between the dollar and Bitcoin to set prices

“The bitcoin system is free to circulate, in the Zonte (Freedom beach) it is not regulated, that is why the President of the Republic is going to send the bill,” said the official.

The president of the BCR also assured that the use of Bitcoin will not be mandatory for Salvadorans since they will be able to continue using the dollar or cryptocurrency to make their transactions.

“It does not mean that we are going to stop using the dollar to use cryptocurrencies, no, the two can converge without any discrepancy between the two, obviously there is a close relationship because they are converted to dollars (cryptocurrencies) and the most beneficial thing about this is that it is going to be voluntary is not going to be obligatory, any person if they wish will be able to pay in Bitcoins or in dollars ”, explained the president of the BCR.

SEE: Salvadoran Bond Price Falls Following Bukele Announcement to Legalize Bitcoin as Currency

While it is true, the official also admitted that Bitcoin is one more form of payment that Salvadorans will use if they wish, many economists warn that it is not viable for daily transactions due to the same volatility that characterizes this cryptocurrency.

Luis Membreño, a Salvadoran economist, exemplified that “if they deposit a remittance of $ 100 today, tomorrow that you want to withdraw it, you may have $ 120 or also $ 80, since Bitcoin does not maintain its value over time.”

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Salvadoran bond prices fall after Bukele’s announcement to legalize Bitcoin as a currency

The bonds have fallen between 1.15% and 2.7% after the speculation caused by Bukele about the national economy.

Investors at the international level reacted distrustful to Nayib Bukele’s statements this weekend when he assured that he will ask the Assembly to approve Bitcoin as legal tender.

On Monday, the price of bonds 2035 and 2050 fell again with reductions of between 1.15% and 2.7%.

The new fall precedes others that have occurred after relevant events such as the 9F of 2020, when Bukele militarized the Legislative Assembly or on May 1 of this year, when the Legislative Assembly dismissed magistrates from the Constitutional Chamber of the Supreme Court of Justice and the Attorney General.

YOU MAY BE INTERESTED: Bukele’s announcement to legalize Bitcoin makes it difficult to negotiate with the IMF, says a financial analysis company

This time, the announcement that the country will legalize Bitcoin has alerted investors who consider this decision as “impulsive announcements that contradict its economic plan,” according to Siobhan Morden, head of fixed income strategy for Latin America at Amherst. Pierpoint Securities.

This financial analysis company warned that President Nayib Bukele’s announcement about adopting Bitcoin as legal tender in El Salvador will only complicate negotiations to secure a $ 1.3 billion agreement with the International Monetary Fund (IMF).

“President Bukele’s recent tweets to fully adopt Bitcoin as legal tender will likely further complicate and delay the IMF’s technical discussions,” Morden said.

The analyst added that “this may reflect a long-term initiative or maybe even a flashy public relations tactic; however, it shows lack of coordination with impulsive announcements that contradict a cohesive economic plan ”.

After the announcement, the finance company has already made new estimates with a higher risk premium of up to 75 basis points for El Salvador over comparable Costa Rican bonds “in the best of cases, with a higher risk of volatility in tensions autocratic, which can undermine the support of the United States to the program of the IMF ”, indicated the company.

The Reuters note also explains that the JPMorgan Global Index (EMBI) showed that the premium demanded by investors to hold El Salvador’s hard currency bonds over US Treasuries widened considerably by 11 basis points to 593bp.

YOU MAY BE INTERESTED: How are bitcoins used? Questions and answers to understand this cryptocurrency

Risky investment

In El Salvador, local economists also fear that this “boost” by Bukele was made without a technical consultation on the implications it generates, since it not only generates uncertainty, but also complications for the collection of the treasury and due to the lack of regulation it could generate a path for money laundering.

The economist and former president of the Central Reserve Bank, Oscar Cabrera, said that “wanting to adopt Bitcoin as legal tender only generates uncertainty, since it is not clear whether it will be supported by the Central Bank of El Salvador and even more so, when the The country is negotiating a program with the International Monetary Fund. In addition, these cryptocurrencies, which are more than one hundred, have many risks and many of a fraudulent nature. They are also very volatile, risky, there is no financial regulator or prosecutor that is aware of this type of cryptocurrency ”. assured.

Cabrera also stated that we must be aware of the price of Bitcoin, which has fallen more than 30%, before the announcement of the Chinese government to prohibit its use.

The economist also explained that it cannot be ignored that Bukele has made this announcement in the midst of a country debt of 96% of the Gross Domestic Product and that what securities require are public policy actions with certainty in the medium term.

The former president of the BCR recalled that in 2017, under his administration, they worked on an analysis, anticipating that any erratic decision would be made wanting to use virtual assets such as cryptocurrencies.

“At that time, in the case of Costa Rica, Honduras, Nicaragua, the Dominican Republic and El Salvador, we shared the point of view of the risk to society of the use of cryptocurrencies and especially the fact of the use that could be made to evade taxes. and with these cryptocurrencies there is no supervisory capacity and if those cryptocurrencies are stolen from you there is no one who can replace it, ”explained the former president of the BCR.

For his part, the also economist Luis Membreño said that it is a currency that is very risky because it does not maintain its value over time and also does not have financial regulation.

“Thinking that with bitcoin you will carry out daily transactions becomes very risky because it does not maintain value over time: today you can deposit $ 100 and tomorrow, as it may be $ 120, it may be $ 80,” Membreño exemplified.

The economist added that it seems contradictory that this government promotes it because “bitcoin is not controlled by governments, and it also allows many transactions to be carried out outside the control and supervision of a financial system that evaluates who is outside the law. This seems more aimed at people who want to launder money, because it is not a currency that has control; other electronic wallets that already work in the country do have control mechanisms of who deposits, what amounts are deposited, “he explained.

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“Cluster of improvisations”

Cabrera regretted that this announcement by the president was not accompanied by information that gives certainty.

“This looks more like an accumulation of improvisations, as it has been since June 2019; It is worrying because we do not have an economic plan, to know if the issuance of this virtual currency is already part of it and especially when we see that all the Central Banks in the world have expressed their opinion on the non-acceptance of these cryptocurrencies, ”said Cabrera.

The former president of the BCR explained that Articles 36 and 37 of the Organic Law of the Central Reserve Bank “make it clear that the colón and the dollar are the only currencies of legal tender and with unlimited power to pay obligations in money in the territory and that Article 184 of the Banking Law prohibits the raising of funds from the public, with or without advertising, under this modality and that the BCR as a regulatory entity of the financial system does not have any regulations that monitor the use of cryptocurrency ”.

With all this panorama, Cabrera said that the consequences could be very serious for El Salvador, not only complicating the negotiations with the IMF.

“Only with the announcement the spread has risen, but in short, these types of decisions that generate certainty are not taken by the financial markets in a positive way,” concluded the former president of the BCR.

For his part, the researcher from the Macroeconomics and Development area of ​​Funde, Rommel Rodríguez, pointed out that it is important that both the Ministry of Finance and the Ministry of Economy explain to the population the positive or negative effects of the country adopting Bitcoin as legal tender.

El Diario de Hoy tried to find out the position of the Salvadoran Banking Association (Abansa) on the proposal, however the union has not yet given a position on the announcement.

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