The decision to adopt bitcoin as legal tender took effect in El Salvador on Tuesday (7/9). The day was marked by optimistic projections about the effects of this decision, as well as small protests in the Salvadoran capital.
Local financial analysts highlighted that El Salvador will have one of the fastest growing economies in the next three years due to the adoption of bitcoin.
“This will have a big effect on this particular country if you take into account the size of its economy. In three years it will have one of the fastest growing economies in the world”, explained analyst Max Keizer, from the local television company Rede RT, noting that the country will also start using geothermal energy to mine bitcoin.
Technology expert and former Central Intelligence Agency (CIA) employee Edward Snowden applauded the adoption of bitcoin in El Salvador. Snowden noted on his Twitter profile that “beyond the headlines, there is now pressure on competing nations to acquire bitcoin,” noting that it is the first country to legalize the circulation of cryptocurrency.
Before launch, El Salvador bought 200 bitcoins, which helped raise the price of the cryptocurrency above $5,000 – although it has now stabilized at $46,000.
Adoption of bitcoin in El Salvador generates optimism
Some citizens heard by CNN Brasil are optimistic. “It will be beneficial… we have families in the United States and they can send money free of charge while the banks charge,” said Reina Isabel Aguilar, who owns a store on the beach in El Zonte, about 30 miles southwest of the capital, San Salvador.
The protests were very localized and were on account of social organizations that oppose the government of Nayib Bukele. The protesters’ main allegation is that the adoption of bitcoin can harm the country’s economy and that the real needs of the people are not being heard.
There were also complaints on social networks regarding the Chivo wallet, which, contrary to what was promised by the president, was not available in app stores from midnight on September 7th. The government had promised to deposit $30 in bitcoins for each person who downloaded the app. Throughout the day, however, the app became available.
Prior to launch, the government installed ATMs that will allow bitcoin to be converted into dollars and withdrawn commission-free from the digital wallet.
Moody’s downgrades El Salvador’s credit
After the bitcoin law was passed, ratings agency Moody’s downgraded El Salvador’s credit quality, while the country’s dollar-denominated bonds also came under pressure.
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