Bitcoin Bulls in Control Ahead of El Salvador’s Crypto Debut
The world is watching as El Salvador prepares to adopt bitcoin as a legal currency on Sept. 7. El Salvador already accepts the U.S. dollar, and bitcoin will be integrated alongside the fiat currency.
As the Central American nation prepares for the transition, the bulls are clearly in charge in the bitcoin market. The bitcoin price is perched above the $51,000 threshold and climbing as the leading cryptocurrency inches closer to its all-time high. The Salvadoran population has mixed feelings about adopting such a volatile asset as legal money.
Fear and Uncertainty
Since El Salvador’s Congress decided to make bitcoin legal tender in June, the country has become a first-mover in its own right. Nonetheless, the move has been met with opposition in the country, with hundreds of people protesting the integration of bitcoin for fear of the unknown.
Given the volatility that is inherent with the bitcoin price, many Salvadorans are uncomfortable about the risks involved. This traces back to a lack of education provided by the government on the cryptocurrency market before jumping into bitcoin.
The Financial Times spotlighted one local, Ricardo López, who works as a chauffeur and has mixed feelings about accepting bitcoin as payment. López pointed to the wild swings in the bitcoin price, saying that if he decides to take it, he plans to convert it into U.S. dollars.
Even if it takes time, the integration of bitcoin into the economy is expected to support wide-scale adoption. Jay Hao, who is at the helm of cryptocurrency exchange OKEx, points to Article 13 of the new legislation. It states that “all obligations in money expressed in USD…may be paid in bitcoin,” which he says will be a “game-changer.”
Those who are willing to accept and transact in bitcoin will have an incentive to do so. El Salvador’s government has introduced a new digital wallet dubbed Chivo that the available for download in the country. The wallet comes with $30 worth of free bitcoin.
The Chivo wallet will also make it possible for El Salvador’s citizens to receive cross-border remittances in bitcoin without having to pay the higher fees associated with money-transfer companies. The recipients then have the option to keep the BTC in the wallet or convert the funds into U.S. dollars at one of the hundreds of bitcoin ATMs that are being installed throughout the country.
Other Latin American countries are taking a page out of El Salvador’s book and are looking to integrate bitcoin into their economies. Cuba, for instance, has announced plans to regulate the leading cryptocurrency.