‘We don’t know’: Salvadorians worried about imminent bitcoin adoption

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SAN SALVADOR, September 1 (Reuters) – At the Salvadoran capital’s main craft market, traders complain that within a week of legal tender bitcoin, no official has come to explain how it will work or what benefits it could to bring.

The sense of unease extends beyond San Salvador’s “Excuartel” market to the Central American country of 6.4 million people, which on Tuesday will become the first country in the world to adopt bitcoin as legal tender.

“We don’t know the currency. We don’t know where it came from. We don’t know if it’s going to make us a profit or a loss,” said Claudia Molina, a 42-year-old t-shirt seller. and memories. “We don’t know anything.”

“They didn’t give us any training. They didn’t tell us what we’re going to use or how to make the change.”

At “Excuartel”, a popular tourist site, the government of President Nayib Bukele has installed one of 200 ATMs in its Chivo digital wallet that will convert the cryptocurrency into dollars and withdraw it without commission.

But some 18 traders and passers-by polled by Reuters said no authority has explained how bitcoin works, so most say they won’t use it, at least to begin with.

In July, three in four Salvadorans had reservations about bitcoin, according to a public opinion poll. Read more

About 300 protesters marched past El Salvador’s Congress on Wednesday to demand the repeal of the new bitcoin law.

“Bukele, understand – in El Salvador we don’t want bitcoin,” said a sign carried by a protester.

Another protester, Roxy Hernndez, a 29-year-old student, said most Salvadorans do not want to use bitcoin and are confused by the law, which states that sellers must accept bitcoin payments, although Bukele said that it was not mandatory for sellers or consumers.

“The bitcoin law is something arbitrary on the part of the government,” said Roxy, wearing a t-shirt with a logo that rejects bitcoin.

Bukele defended his initiative by insisting that the use of digital currency will be optional in the impoverished, dollarized country, and that it will eliminate the commissions Salvadorians pay abroad to send funds home.

More than 2.5 million Salvadorans live abroad – the vast majority in the United States – and in 2020 they returned nearly $ 6 billion, or 23% of the country’s gross domestic product.

“The clumsy opposition is always playing chess in one fell swoop. They have gone all out to scare the people about the bitcoin law and maybe they will achieve something, but only until September 7,” wrote Bukele on his Twitter account last week.

“Once it goes into effect, people will see the benefits; they will be presented as liars,” he added. “And what if someone doesn’t want to use bitcoin? Well, nothing. Don’t download the app and go about your life as normal.”

Bukele’s plan includes a $ 30 bitcoin equivalent bonus for those using the government’s “Chivo” electronic wallet, a local word for something “good” or “enjoyable”.

CONCERN

Critics of Bukele’s plan argue that using bitcoin is risky given the volatility of the cryptocurrency and because it could be used to launder money. They singled out Salvadoran officials whom the US State Department accused of corruption. Read more

“(The) bitcoin law promises many surprises, unintended consequences and costs that have not been factored in,” said Steve Hanke, an economist at Johns Hopkins University.

Hanke said it was “inconceivable” that the new standard could escape the guidelines set out by the Financial Action Task Force (FATF), an intergovernmental institution that fights money laundering.

“The last thing El Salvador needs is a report from the FATF,” he said.

Since El Salvador adopted the dollar as legal tender in 2001, average annual inflation has been only 2%, one of the lowest in Latin America. This record, critics say, could be compromised by the introduction of a cryptocurrency that fluctuated in value by $ 2,500 in a matter of hours.

“I prefer the dollar, because we already know it and we know it well, there is no problem. But since we don’t know (bitcoin), we don’t know how it will work”, said Jose Guardado, a 48-year-old man. -old farmer from the municipality of Aguilares north of San Salvador.

The World Bank and the International Monetary Fund have raised environmental and transparency issues surrounding bitcoin adoption, and markets are skeptical. Read more

After the approval of the Bitcoin law, the rating agency Moody’s downgraded El Salvador’s creditworthiness. The country’s dollar-denominated bonds are under pressure.

“The markets are telling us that Bukele’s authoritarian tendencies and his crazy cryptocurrency ideas will lead to monetary chaos and economic collapse,” Hanke said at Johns Hopkins. “For the United States, that would mean a new wave of migrants from an unstable failed Central American state.”

Reporting by Nelson Renteria; Additional reporting by Diego Ore in Mexico City; Editing by Steve Orlofsky and David Gregorio

Our Standards: Thomson Reuters Trust Principles.

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