In a world-first, bitcoin becomes a legal tender in El Salvador on Tuesday. This is a real-world experiment that proponents say will reduce commission costs for billions of dollars sent home from foreign countries but which critics alerted may boost money laundering.
The plan led by the charismatic, young and famous president Nayib Bukele is intended at enabling Salvadorans to save on $400 million spent yearly in commissions for remittances, usually sent from the United States.
Voting shows Salvadorans are dubious about utilizing bitcoin and cautious of the unpredictability of the crypto that critics believe can increase financial and regulatory risks for the financial institutions. Yet, some netizens are optimistic.
In the run-up to the launch, the government has already been installing ATMs of its Chivo digital wallet that will enable the crypto to be changed into dollars and withdrawn without commission. But, on Monday, Bukele considered toning down expectations for rapid outcome and asked for patience.
Bukele tweeted that similar to all innovations, El Salvador’s bitcoin procedure has a learning curve. Every path to the upcoming time is akin and not everything will be attained in a day or a month.
The country purchased its first 400 of the crypto on Monday, pushing prices for bitcoin 1.49% higher to more than $52,680 temporarily.
After Bukele’s bitcoin law was accepted, rating agency Moody’s lowered El Salvador’s creditworthiness, while the nation’s dollar-denominated bonds have also come under pressure.