How El Salvador Goes Through the Bitcoin Transformation

Last month we published an article about The new currency of El Salvador. Bitcoin transformation in El Salvador has been in full swing for a few weeks, in many places it is possible to pay with Bitcoin. The 40-year-old president of El Salvador, here to watch Tweets about his bitcoin promo. However, not without a hitch, Chivo, the country’s digital wallet, soon encountered a malfunction, making payment impossible for a while. There have also been some protests, as with any major change. This does not change the fact that President Bukele remains very popular among the majority of the population.

protests

It is a gross misconception that these protests are only taking place out of sentiment against Bitcoin or other cryptocurrencies. As is often the case in Latin America, major decisions are made without a democratic process. Many of the protesters are not necessarily against the legalization of Bitcoin and some of the protesters also own cryptocurrencies themselves. However, they are angry that such a decision was taken without the consent of the people.

In addition to the lack of democracy within the country, the protests also stem from a lack of knowledge and understanding on the part of many executives regarding bitcoin legislation. Also, the majority of El Salvador residents have little knowledge or interest in cryptocurrencies. The country has many other problems and at the moment the whole circus seems to be focusing only on this policy.

Bitcoin Beach

Ever since rumors began that bitcoin would become legal tender, El Salvador has been inundated with expats. These mostly settled in El Zonte, known as Bitcoin Beach. Through (anonymous) investments and the widespread use of bitcoin in daily life, the region has received a huge economic boost.

Since 2019, Bitcoin has been used in El Zonte as a trial for the rest of the country. However, the success of Bitcoin Beach does not guarantee that it will be the same in the rest of the country. Large, often anonymous, per capita investments at the national level will not come close to the experience on the Salvadoran coast. However, it is plausible that even without these significant investments Bitcoin Beach would not have failed.

decentralized independence

The loudest voices opposing the developments in El Salvador are all central bodies. The International Monetary Fund, the US government and central banks just to give a good picture.

With the introduction of Bitcoin, the United States is losing a lot of political and economic power in a country that is within its sphere of influence. Previously, El Salvador’s economy was based solely on the US dollar. This will of course remain the most influential currency for the foreseeable future, but it is no longer the only one.

The International Monetary Fund is especially wary of the stability problems involved in bitcoin. In addition, any country should avoid international legal constraints with such a drastic change in the law. These are good arguments, Bitcoin is not known for its stability and in many countries cryptocurrencies are still taboo. However, the global trend appears to be increasingly positive towards the adoption of cryptocurrencies in the economy.

Also, do not forget about the recent hyperinflation in Argentina and especially Venezuela. Both countries are culturally and politically close to El Salvador. The exchange rate of the Venezuelan bolivar against the euro has fallen to such an extent that it is no longer visible on the chart.

Daily life in El Salvador

However, not much will change in everyday life for the average Salvadoran citizen. As said before, they have more important things to worry about. Poverty, corruption, poor healthcare and climate change to name a few. However, a large part of the population is curious about the possibilities, especially the youth.

The biggest advantage for residents is the possibility to make international reservations for free. Transferring digital forex money in El Salvador costs a lot of money, based on the purchasing power of many people. It is now possible to isolate the high-income broker. Also, in many families, at least one person works abroad, usually in another Latin American country or the United States. Money being sent to El Salvador from there can be a lot cheaper now.