Bitcoin does not convince El Salvador: protests erupt among citizens before the entry into force of the cryptocurrency
In June of this year, El Salvador made history by passing a law to be the first country in the world with Bitcoin as its national currency. The new law will come into force on September 7, however, it is not something that convinces everyone. Salvadorans have taken to the streets in recent days protesting the speed with which the decision to adopt the cryptocurrency was made and warning of skepticism that it is implemented.
The new law will put El Salvador Bitcoin as a currency of equal validity to the US dollar (current currency of El Salvador). While the US dollar is a stable currency that has proven its value for decades, Bitcoin stands out for its high volatility in the market.
Volatility and money laundering
They are the two main concerns of Salvadoran citizens before the arrival of Bitcoin: the great volatility it has and the possible money laundering that it can generate. President Nayib Bukele has promoted this bet as a way to facilitate remittance payments from Salvadorans living abroad (mainly immigrants in the United States who send money to relatives). However, it is a measure that does not have the approval of international agents such as the International Monetary Fund.
The difference between USD and BTC is that the latter can see its value change up to 10% in a matter of hours. This certainly makes it difficult to trust Bitcoin as a long-term currency. No one knows how much the savings that a Salvadoran now makes in Bitcoin will be worth ten years from now. They can be worth 50 times more, but they can also be reduced to nothing.
The government of El Salvador has proposed as a security measure a fund of 150 million dollars to guarantee convertibility. That is, to guarantee citizens that they will be able to return to the US dollar at any time, a dollar that will continue to be the national currency together with Bitcoin in complete equality of conditions.
The other aspect of concern in El Salvador is money laundering. If Bitcoin is the default and accepted currency in institutions across the country, it is easier to convert black money in dollars to Bitcoin without anyone asking anything. Once the money is transferred to Bitcoin it is practically anonymous and impossible to trace who is behind it.
In a few days, Bitcoin will enter into force in El Salvador as a national currency. From there, we will see in the medium term how the bet works of Nayib Bukele for an international and decentralized currency. Much to gain and at the same time many risks ahead, such as Bitcoin itself.
Via | Reuters