- Not everyone in El Salvador is as welcoming of Bitcoin as President Nayib Bukele.
- Many have taken to the streets to protest the country’s new Bitcoin Law, which will come into force on September 7.
- The objections to Bitcoin adoption range from the token’s inherent volatility to its potential for abuse.
El Salvador is nearing the day of its financial revolution but not everyone is onboard the Bitcoin train. Presiden Nayib Bukele's decision to make Bitcoin legal tender, which will kick in on September 7, is not going down well with a large swath of the population.
According to local media reports, protests against the
Bitcoin Law, which were few and far between until a couple of weeks ago, are becoming more common.
Protests believe that once Bitcoin becomes mandatory, it poses a serious threat to El Salvador’s economy.
El Salvador can’t control the dollar — but it won’t be able to control Bitcoin either
The objective of introducing Bitcoin as legal tender is to give El Salvador more control over its economy. It currently uses the US dollar for
transactions, however, the country has no say when it comes to US’ monetary policy.
This means the US Federal Reserve can adjust the supply of dollars as per its requirement and the dollarised El Salvador will have to face inflation due to the excess cash, even though it is not being pumped into its local economy
The counter argument against this is that even though Bitcoin is not the dollar and has no central authority controlling its supply — it’s not in El Salvador’s control either. In addition to lack of control, the value of Bitcoin is much more volatile as compared to the US dollar.
Rather than solve the country’s existing problems, critics argue that the introduction of Bitcoin as legal tender could add to El Salvador’s financial crisis.
We know this coin fluctuates drastically. Its value changes from one to another and we will have no control over it.
Stanley Quinteros, a member of the Supreme Court of Justice’s workers’ union, told Reuters
The Salvadoran Association of International Cargo Carriers (ASTIC) has threatened to charge an additional 20% fee to those paying for freight in Bitcoin to protect against the
cryptocurrency’s volatile nature.
The use of Bitcoin is not in the interest of the people
Protestors are also
wary that the introduction of Bitcoin into the economy may actually add fuel to rampaging corruption already seen within its borders.
While Bitcoin is not anonymous, per se, it is still really hard to track. It’s also possible to hide Bitcoin transactions with techniques like ‘mixing’ or using logless virtual private networks (VPNs).
Bitcoin would facilitate public corruption and the operations of drug, arms and human traffickers, extortionists and tax evaders. It would also cause monetary chaos, hit people’s salaries, pensions and savings, ruin many MSMEs, affect peasant families and hit the middle strata.
Written statement by activist group La Prensa Grafica Noticias de El Salvador
The use of Bitcoin is NOT mandatory
While El Salvador is declaring Bitcoin as legal tender, it does not mean that everyone absolutely has to conduct their transactions in the cryptocurrency.
While Bukele’s pitch is that Bitcoin will make cross-border transactions — like remittances which account for 20% of the country’s gross domestic product (GDP) — residents are free to continue using the US dollar, if they so wish.
It’s only economic ‘agents’, like ASTIC, that need to accept Bitcoin payments, no excuses, as per Article 7 of the Bitcoin Law.
The world is watching El Salvador’s Bitcoin experiment
Change is never easy, especially when it comes to money. Money has been the basis for wars, revolutions, and coups throughout history. And, now El Salvador is caught in the crosshairs of Bitcoin versus the US dollar.
As September 7 draws closer — the day that the Central American nation will enforce Bitcoin as legal tender — it’s no surprise that political unrest in El Salvador is also increasing.
The success or failure of El Salvador’s experiment with Bitcoin may determine the approach other nations, at least the ones which are dollarised, may take soon.
For a more in-depth discussion, come on over to Business Insider Cryptosphere — a forum where users can deep dive into all things crypto, engage in interesting discussions and stay ahead of the curve. SEE ALSO:
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