Today, there are reports of El Salvadoreans taking to the streets in furious protests against the country's recent controversial move to legalize the use of Bitcoin in the country. Where do we go from here?
For a quick recap:
- On June 2021, El Salvador passed a law stating that: "every economic agent must accept bitcoin as payment when offered to him by whoever acquires a good or service".
- This move by the El Salvadorean government sparked the concern of global financial agencies including the World Bank and the International Monetary Fund, IMF, who described the initiative as an inadvisable shortcut.
Despite these concerns, El Salvador moved ahead with a swift rollout and on September 7th, Bitcoin was formalized as legal tender.
Bitcoin enthusiasts were ecstatic, I count myself among them.
El Salvador's bold move to bite the bullet and formally recognize and accept bitcoin ushers in a new wave of mainstream acceptance for cryptocurrency.
Crypto in El Salvador
Incidentally, in addition to making bitcoin legal tender, other crypto/ blockchain projects were also featured.
The government's blockchain infrastructure is to be built on Algorand. Algorand's token is the ALGO.
Banco Agricola, the country's largest financial institution, is partnering with Flexa to facilitate instant, fraud proof payments. AMP is Flexa's digital token.
NO to Bitcoin?
So far so good, right? Great news for the crypto movement. So why the bitter protests? Why are bitcoin machines being vandalized, and why is a section of the population so vehemently opposed to legalizing cryptocurrency?
Well, the challenge for El Salvador is that the law passed in June 2021 states that: “every economic agent must accept bitcoin as payment when offered to him by whoever acquires a good or service.” This appears to eliminate freedom of choice for private enterprises. Some private enterprises may be fearful of the extreme volatility in Bitcoin prices. This, coupled with the weight of mainstream media describing the movement as a bitcoin scam and established global bodies expressing concern can be very daunting for a country saddled with debt. And in the face of the unknown, when presented with the inevitable teething problems to be encountered venturing into uncharted territory, resistance is inevitable.
The government's digital Chivo wallet faced initial maintenance problems, allegedly overloaded by El Salvadoreans eager to cash in on the government's $30 incentivization bonus. There have also been reports of vandals attacking Bitcoin machines, some of which were allegedly reported inoperable for much of the week since launch.
Into the Unknown
Given recent developments, I wonder how many people fully understand the currency, its advantages and risks, and how many are actually simply buying into the negative hype and protesting against the government's move without a full understanding of the project.
According to a study conducted by the Central American University, there is a need for a lot of education as many El Salvadoreans do not trust the currency or understand how to use it.
I am reminded of myself back in 2016 when a colleague of mine mentioned bitcoin and asked me my thoughts about the cryptocurrency.
"It's not real money!" I screamed, parroting what I had heard on the media. "It's super shady. I wouldn't trust it. Cybercriminals use it."
I was a super skeptic.
Fast forward, and here we are in 2021, and I am in the throes of a heated love affair with bitcoin. Who would have thought? Bitcoin makes converts of the best of us.
And so, I could be wrong but I think that many of the regular people who fear bitcoin do so because they do not fully understand it. And I think time and education could make converts of many. Mainstream financial institutions though? Well, of course, we know why they would hate it. For now.
In the end, succeed or fail, El Salvador's move to enact this bitcoin law law is nothing short of a bold move and, as an enthusiast myself, I wish El Salvador nothing but the best.
Where do we go from here? Only time with tell.
For li'l ole me, I remain bullish on Bitcoin.
But I'm no expert, so what do you guys think?