Bukele remains firmly in power after disastrous bitcoin rollout in El Salvador
Analysis. The first protests against Salvadoran President Nayib Bukele took place this week after a shaky premier of bitcoin as legal tender in the country. Small merchants are confused and doubtful about the project.
written by Gianni Beretta
Published on
September 11, 2021
It was a rough start for Bitcoin in El Salvador, the first country in the world to give the status of legal tender to the cryptocurrency. Likewise for its “millennial” president, Nayib Bukele, who saw a drop in his popularity for the first time, as well as the largest street demonstration against him.
Beside the fact that on Tuesday Bitcoin lost more than 10% of its value in a couple of hours (maybe even connected to its launch in the small Central American country), most Salvadorans, at least two-thirds of whom are trapped in an informal economy of survival, oppose the legal obligation to accept payments in the digital currency even for small and medium-sized businesses; moreover, few are knowledgeable about how Bitcoin works, except for the fact that it is synonymous with pure speculation.
There were also some initial technical malfunctions: the state electronic wallet called Chivo (“cool”), which provides a gift of $30 on registration, worked only on the Huawei network. Bukele’s response to the generalized chaos was to double the government’s initial stake on its platform to 400 bitcoins (which immediately led to losing $1 million), a measure that was supposed to keep the prices of goods and services stable against any volatility of the exchange currency (the process behind this was left unclear). Later, he admitted in an embarrassed tweet that there had been some technical problems and that “as with all new things, it will take time to understand how to use it; but El Salvador has every right to move forward towards the first world.”
The government has assured that the use of cryptocurrency will save $400 million in transaction fees—particularly in the transfer of the $6 billion that Salvadoran emigrants are sending each year to their families back home (nearly a quarter of revenues at the national level). The government platform will absorb these expenses, at least initially. But it will not be able to extend this benefit for long, given El Salvador’s alarming debt exposure, further aggravated by its ongoing gamble.
More:
https://global.ilmanifesto.it/bukele-remains-firmly-in-power-after-disastrous-bitcoin-rollout-in-el-salvador/