Bitcoin is officially legal tender in El Salvador. The Central American country has been claiming for some time that it was going to declare the world’s number one digital currency by market cap the equivalent of the U.S. dollar and now that step has been taken, but unfortunately, the transition is proving to be somewhat turbulent as the nation’s regulators didn’t foresee all that could occur ahead of time.
El Salvador Is Having a Rough Transition
Let’s start with the positive first and foremost. The country of El Salvador has purchased approximately 400 bitcoin units over the past few days to get its digital currency system going. Right now, those units are worth more than $20 million. In addition, customers can simply use their national IDs to sign up for what’s known as a Chivo wallet, which is a digital wallet system designed to hold and store bitcoins for residents. These individual wallets will also come with $30 in BTC for each user.
Lastly, El Salvador is the first country to take this step involving bitcoin, making it a revolutionary soldier in the fight for economic independence and digital finance. It is hard to say if other nations are likely to follow the same strategy down the line, but El Salvador has been the first and could potentially give other nations the confidence and means to do the same.
Despite all this hype and hoopla, the debut of bitcoin as legal tender within the nation’s boundaries has been marred by some serious issues. First off, the Chivo wallet system wound up crashing on the first day, meaning that individuals could not gain access to their bitcoins or purchase additional units while saving them to their wallets. This created panic in the streets given that protests were already occurring on a regular basis, with many users claiming that the establishment of bitcoin as an official currency would lead to poverty and a weak financial structure.
The Price Has Crashed
Second, this led to the inherent drop of the bitcoin price. As early as last Monday night, bitcoin was trading in the low $50,000 range, suggesting that the currency was potentially recovering from its May, June, and July flops, though now at the time of writing, the asset has fallen to about $45,000 per unit, meaning that the currency has fallen by more than $5,000 in just under a full day.
Lastly, protests continue in El Salvador amongst those who are simply not interested in bitcoin. They are not interested in using it or learning about it. They are not interested in buying everyday items with it. They relied on the U.S. dollar, they understood it, and they appreciate the status quo. Thus, El Salvador finds itself a divided nation over something that was ultimately meant to unite everyone: bitcoin.