El Salvador today adopts bitcoin as legal tender, amid doubts and rejections

The Bukele government assures that the controversial measure will contribute to the banking of the population and prevent a loss of $ 400 million in remittances that Salvadorans send from abroad and which represent 22% of the GDP, although some experts believe it. question.

In El Salvador, which dollarized its economy two decades ago, the majority of 6.5 million Salvadorans reject the bitcoin promoted by Bukele and prefer to continue using the greenback, according to the latest polls.

“This bitcoin is a currency that does not exist, it is a currency that will not favor the poor but the rich, because one of the poor, what can he invest, if we barely have enough to eat? “said José Santos Melara, a veteran of the civil war (1980-1992) who took part in a demonstration against the cryptocurrency.

Seven in ten Salvadorans said they “disagree or strongly disagree” with bitcoin, which will circulate alongside the dollar, says a recent University of Central America (UCA) survey that consulted 1,281 people in mid -August.

65.7% of the more than 1,500 people consulted in another poll by the newspaper La Prensa Gráfica said they disapprove of the cryptocurrency.

The director of the UCA’s Institute of Public Opinion, Laura Andrade, assures that the population is resistant to bitcoin because they do not see it as a way to improve their economic situation.

“These are decisions [de forma] We do not know that this administration took this administration with the legislators, and that we see that people do not perceive a positive impact to significantly transform their living conditions, ”Andrade told AFP.

The UCA survey indicated that 65.2% of the population is not interested in downloading the “Chivo” electronic wallet needed to make bitcoin purchases and sales, and does not agree to that the government grant the equivalent of $ 30 as an incentive to cryptocurrency users, as you have decided.

But Jorge García, a 34-year-old hairstylist who has used bitcoin for three years, believes it “has a future” and hopes it “grows in value.”

The Bukele-like Legislature approved the bitcoin law in June and endorsed a $ 150 million trust at the end of August to ensure the “automatic convertibility” of bitcoin into dollars.

The law establishes that the exchange rate between bitcoin and the dollar “shall be freely established by the market” and oblige to “accept bitcoin as a means of payment”.

The government is installing more than 200 “Chivo points”, bitcoin vending machines across the country, some guarded by the military to prevent possible damage to the hands of opponents.

Economists and organizations such as the World Bank, the IMF, and the Inter-American Development Bank (IDB) are skeptical about the adoption of bitcoin as legal tender alongside the dollar.

It will have a “negative impact” on the living conditions of the population given the “high volatility of the registration price”, and “will affect the prices of goods and services”, explains economist Óscar Cabrera, of the University of El Salvador.

Dealing with bitcoin will be like “the perfect storm in which we come on the Titanic and no one is driving,” said Cabrera, former chairman of the Central Reserve Bank of El Salvador.

The fact that its price is determined “exclusively by the market” makes bitcoin “very volatile”, warned the Salvadoran Foundation for Economic and Social Development (Fusades).

The Foundation also considers it “unconstitutional” to impose “the mandatory acceptance of bitcoin as a means of payment when offered” in any economic transaction. Encouraged by strong public approval, but criticized by several measures deemed authoritarian and which undermine the independence between the powers of the state, Bukele defends his decision and called the opposition “clumsy” for having “frightened” people about cryptocurrency. The United States has called on El Salvador to have a “regulated”, “transparent” and “responsible” use of bitcoin, and to “protect itself from bad actors”.