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Brief description of the first day of Bitcoin usage in daily payment: technical problems and protests

Sep 23, 2021

Due to BBC reports, the first week that Bitcoin has been a legal tender in El Salvador resulted in technical problems, protest and cryptocurrency’s sharp fall in market value.

On Tuesday, September the 7th, the price of Bitcoin fell from USD 52,000 per coin to USD 43,000, reaching its lowest mark in almost a month. As a result of a cryptocurrency daily usage blurry start one of the poorest countries in Latin America has lost around three million dollars, resulting in critics from El Salvador’s pollical opposition.

The use of Bitcoin as a legal tender did not go as smooth, as Nayib Bukele, the President of El Salvador, intended. The problems began when such platforms as Apple and Huawei did not support the digital wallet, developed by the El Salvadorian authorities, known as the Chivo, and thousands of Latin American country citizen have rushed to open digital wallet account via a computer, as a result, Chivo servers overloaded and stopped working for a while. However, authorities have managed to fix abovementioned technical issued and more and more platforms began to maintain Chivo, including Starbucks and McDonald’s.

As promised, the government of El Salvador has gifted away USD 30 to each citizen opened a cryptocurrency wallet. One of the main governments arguments is the assumption that the use of cryptocurrency can save up to USD 400 million per year for country’s budget, due to loss of need to pay transaction fees for funds sent from abroad.

Although the BBC’s estimates are less optimistic – the savings could be around USD 170 million a year.

"We need to break the paradigms of the past. El Salvador must have the right to move towards the first world,” President Bukele wrote on Twitter.

For example, Ed Ernandez, local citizen who owns a small shop in the San Salvador, country’s capital, selling rice, beans and cleaning products, spoke in favor of cryptocurrency implementation:

“It is good not to use physical money during a pandemic. Also, this protects business owners from counterfeit money used by the customers.”

However, not everyone is excited about the innovations, as the Bitcoin has experienced a significant drop of value on the first day of its usage as a legal tender, loosing as much as 20% of value at one point.

“It has been a very bad day for the President Bukele, his government and the whole Bitcoin experiment. Most people of El Salvador are very poorly informed about the cryptocurrencies, but what we know is that it is an extremely vulnerable and fragile market, which has been proved today.” said opposition politician Johnny Wright Sol. “The state supports these types of payments and is aware of the risks, but it must be taken into account that the state – it is not just the President and the governments – the state are all country residents!”

He emphasizes that the decision to introduce Bitcoin has been taken in a hurry. "The Bitcoin law was passed in parliament without any debate. It only took five hours to consider the bill. No, we are not opponents of Bitcoin, but we do not believe that businesses and citizens should use Bitcoin in their daily lives. I think the bill needs to be examined."

Wright Sol is not the only critic of Bitcoin introduction to daily markets. More than 1,000 protesters gathered near the Salvadoran Supreme Court building, where tires were burned. There are concerns that without financial instability, the introduction of Bitcoin could increase the volume of illegal remittances.

Wright Sols is not the only critic of the introduction of Bitcoin. More than 1,000 protesters gathered near the Salvadoran Supreme Court building, where tires were burned. There are concerns that without financial instability, the introduction of Bitcoin could increase the volume of illegal remittances. However, local businessman Ernandez is not worried about the vulnerability of the cryptocurrency.

"Yes, it is a risk, but there is a risk in everything we do in life. When we own a store, other times we buy products that we don't sell in the end. While others see the crisis, I see a new opportunity,” says Ernandez.

It was previously reported, that Tuesday 07th of September, 2021, El Salvador became the first country ever to use the Bitcoin crypto-currency as a legal tender, despite widespread skepticism and international warning about consumers potential risks.

Recent opinion polls show that most of El Salvador's 6.5 million people are skeptical about the cryptocurrency and will prefer to continue to use the US dollar, which has been El Salvador's official currency for the past 20 years. Despite the blurry start of Bitcoin use, our editorial office still sees that as a great step towards further implementation of cryptocurrencies into the everyday routine – Per aspera ad astra!

Also, for those interested in cryptocurrency business affairs we propose Estonian Cryptocurrency Exchange License and Lithuania as a jurisdiction for your crypto business. In case of interest, we may provide you all information and soon we will publish the special article about the crypto regulation in Lithuania. So, please stay tuned and do not hesitate to contact us.

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