El Salvador made history on Tuesday, becoming the first-ever nation to adopt Bitcoin as legal tender.
The country had a slightly rocky rollout of the cryptocurrency, however, dogged by value fluctuations, technological problems, and protests in the street.
The controversial adoption, codified by a law passed in June, saw the Government introduce its ‘Chivo’ app, to serve as a Bitcoin wallet, and the installation of ATMs across the country allowing users to convert Bitcoin into US dollars, which is its other legal tender and will remain as such.
Analysts have expressed concern about the volatility of the cryptocurrency for regular and official use, and indeed, they were somewhat vindicated on the day, as the value of the cryptocurrency crashed more than 15 per cent, before rebounding slightly, to settle nine per cent down.
Leading proponent of the law President Nayib Bukele celebrated the drop, however, saying the country had taken the opportunity to “[buy] the dip”, purchasing 150 new coins (worth around €6 million).
The launch also faced technical problems, as Apple, Huawei and Google had to be prompted by the President to launch the app on their app stores.
Following this, high uptake forced the app to be taken offline, before being re-launched with a larger server capacity.
Protestors took to the street in protest at the adoption, expressing concerns about the aforementioned volatility as well as a perceived vulnerability to illicit transactions and money laundering.
Externally, international bodies have also expressed concern about the launch, with credit rating agency Moody’s downgrading the country’s creditworthiness, and the World Bank repeatedly stating it would not help El Salvador adopt Bitcoin, given “environmental and transparency shortcomings.”
Promising $30 (€25.36) worth of Bitcoin for each user in a drive to push adoption of the cryptocurrency, Mr Bukele has insisted that it will save Salvadorans $400 million (€338.2 million) a year on commissions for remittances, and allow access to financial services for people with no bank account.
“We must break the paradigms of the past”, he Tweeted, “El Salvador has the right to advance towards the first world”.
By the end of the day, with the app available on more mobile platforms, the President was celebrating the success of the launch, sharing photos of the cryptocurrency being accepted in a number of prominent outlets, including McDonald’s, Starbucks, and Pizza Hut.
Twitter/ Nayib Bukele
The forum was chaired by Chief Officer of Financial Stability and Statistics Alan Cassar
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