El Salvador’s citizens skeptical of the adoption of bitcoin as legal tender

El Salvador’s citizens skeptical of the adoption of bitcoin as legal tender

Cryptocurrency
September 13, 2021 by Editor's Desk
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More than a thousand people marched in El Salvador’s capital on Tuesday to protest the government’s adoption of bitcoin as a legal tender in the country. Polls indicate that Salvadorians are wary of the volatile cryptocurrency, which can shed or gain hundreds of dollars in value overnight.  Many economists are worried about how Bitcoin might
El Salvador's citizens skeptical of the adoption of bitcoin as legal tender

More than a thousand people marched in El Salvador’s capital on Tuesday to protest the government’s adoption of bitcoin as a legal tender in the country. Polls indicate that Salvadorians are wary of the volatile cryptocurrency, which can shed or gain hundreds of dollars in value overnight. 

Many economists are worried about how Bitcoin might affect El Salvador’s economic stability. Despite the concerns, the Latin American country became the first in the world to embrace Bitcoin as legal tender on Tuesday. Government officials stated that no one would be forced to use digital currency. However, cryptocurrencies remain a point of controversy in the country.

Cristian Ambrosius, a lecturer at the Institute for Latin American Studies at Berlin’s Freie University, was asked in an interview with DW News if he believed that having Bitcoin as a legal tender would be beneficial to the people of El Salvador. He said, “It’s hard to say. It’s a big experiment, so it’s hard to say how it will turn out in the end. I’m skeptical, and most Salvadorians are skeptical. “

He added, “It’s important to take into account that El Salvador has already lost control over its currency. It’s using the dollar since 2001. It has no monetary autonomy, so it has no control over its currency. Now, it is adding another currency over which it doesn’t have control either. It adds a lot of instability to it, so I’m skeptical. Most economists are skeptical whether this will bring a lot of benefits. In the end, it is a huge path of the government on the rise of the demand for bitcoin.”

Remittances account for more than 20 percent of the dollarized economy in El Salvador, and they are essential for re-spurring growth in the country. Bitcoin could, in principle, make these transactions simpler and cheaper. However, it’s not necessary to make bitcoin the legal tender of a country; The people don’t need the government to authorize them to make international transfers in bitcoin because that has been possible. What people are objecting to is the obligation to use bitcoin. There’s an element of enforcing the use of bitcoin, and the people don’t really need it to be legal to make a legal tender to facilitate the sending of remittances.

El Salvador’s President has been lobbying hard for Bitcoin, but he has not been very explicit about his motivations. The reason behind President Bukele’s decision likely is that he wants to fuel economic growth based on the inflow of digital currencies. It’s also somewhat paradoxical because the original idea of Bitcoin is to escape government control. So, it seems to be paradoxical when a government starts to implement it as a legal tender.