“Invest here and make as much money as you want,” he said, dressed in white and wearing an inverted baseball cap, in front of hundreds of Bitcoin enthusiasts in November 2021. But this bold decision was not exactly a resounding success. Despite a strong government push, including free transactions, a sign-up bonus, and discounts on gasoline, Bitcoin`s Salvadoran debut was mostly disappointing, according to a report from the National Bureau of Economic Research. Jerry Brito, executive director of the Coin Center, a crypto-focused think tank based in Washington, DC, raised similar concerns. He called the law a “disgrace” and said in a Twitter post that it “forces citizens to accept bitcoins whether they like it or not. This is intuitively wrong for any liberal. The debate may be premature. Advocates of El Salvador`s Bitcoin law point out that another article, No. 12, temporarily offers an exit for traders. Anyone who does not have “access to technologies that allow them to transact in Bitcoin is excluded from the obligation,” the law states. Jesus Cáceres` small watch shop in the center of San Salvador is a company that does this. Three signs read “We accept Bitcoin,” but the 47-year-old watchmaker has only made two sales with the cryptocurrency.

Cryptocurrencies are changing this by helping individuals access online financial services such as savings apps, lending platforms, and even microinsurance solutions from their mobile devices, with far fewer barriers and at lower fees than traditional financial institutions. It is these three characteristics of cryptocurrencies – accessibility, affordability and anonymity – that make Bitcoin an attractive option for the unbanked in countries like El Salvador. But the American empire in the 20th century cannot be far behind in this ranking, especially when it comes to its actions in Central America. And this month marks the one-year anniversary of a much more recent struggle for independence: El Salvador`s efforts to decouple its economy from the U.S. dollar by recognizing Bitcoin (BTC) as legal tender and promoting national adoption of cryptocurrency. Tether is colluding with giant fund managers like Vanguard and BlackRock, according to JPMorgan analysts. Its holdings far exceed the corresponding investments of companies such as Google and Apple, as Bloomberg notes, according to this JPMorgan chart. But on a recent visit to the region in the shadow of the Conchagua volcano in the east of the Central American country, Reuters found no heavy machinery, no construction workers, or no raw materials indicating progress in building this great symbol for Bitcoin. But according to the April report, “Bitcoin is not widely used as a medium of exchange” because users “don`t understand it, they don`t trust it, it`s not accepted by businesses, it`s highly volatile, and it has high fees.” Companies – whether Web2 or Web3 oriented companies that don`t want to hold crypto but want to interact with crypto holders – want to be able to offer this as a payment mechanism for their communities. The other is handy where traders are happy to accept crypto. CONCHAGUA, El Salvador, Sept 7 (Reuters) – A year after El Salvador introduced bitcoin as legal tender, the area where the world`s first cryptocurrency city was supposed to be built — a circular metropolis powered by a volcano — is still dense jungle. Another advantage was no-fee transactions.

Outside of Chivo, Bitcoin transactions can incur high fees. When using a Bitcoin ATM, fees of up to 20% of the transaction amount may apply. But with Chivo, there are no fees for transactions, Bitcoin to dollar conversions, and withdrawals at Chivo ATMs. Related: “El Salvador: How It Started in Relation to the Bitcoin Law in 2021 In retrospect, the biggest failure of Bitcoin`s deployment in El Salvador was the botched technical, logistical, and communicative aspects of the first, seemingly rushed deployment. Many Salvadorans have reported identity theft, with many Salvadorans claiming that their $30 registration bonus expired before accessing the system. In addition, the specific requirements of the Bitcoin law have been poorly communicated, especially when it comes to requirements for traders. Outside of El Salvador, even some Bitcoiners have seen elements of the Bitcoin law as authoritarian taxation. However, it will take more than a little good press to solve El Salvador`s economic and diplomatic problems. The country is facing a ballooning deficit, allegations of government corruption and a downgrade of sovereign debt. The World Bank and the International Monetary Fund are wary of El Salvador`s crypto game. Speaking instead of using volcanoes to mine Bitcoin sustainably (Do you hear that, China? Do you listen, Elon?), Bukele diverted the conversation from the troubling array of the country`s problems and effectively glossed them over. Although the law requires all businesses to accept Bitcoin, in reality, only 20% do.

About 5% of all sales were paid in bitcoin through the Chivo wallet, and just as most households using Chivo prefer to keep their money in cash rather than bitcoin, 88% of businesses convert their bitcoin to dollars. The adoption of Bitcoin also involved significant financial commitments from the small country, at a time when it seems it couldn`t really afford them. The media calculated the total bill at around $425 million, with most of it representing the initial enrollment incentives of $30 BTC, escrow pools for bitcoin-to-dollar conversion, and a number of investments directly in bitcoin. A little arithmetic suggests that the cost of the infrastructure was about $100 million. The bitcoin investments on El Salvador`s balance sheet could represent the most obvious faux pas of the rollout — if they are real. Bukele and its government have not disclosed the on- or off-chain location of their alleged Bitcoin purchases, so we still rely heavily on Bukele`s tweets. One calculation is that Salvadoran investments in Bitcoin have caused about $50 million in unrealized losses. Admittedly, El Salvador is far from having all the basic infrastructure needed to make Bitcoin a widely used payment system throughout the country.

Internet access is spotty and there are very few Bitcoin ATMs where people can exchange money and crypto, among other things. (The country also plans to set up a $150 million “trust fund” that it can tap into to offset volatile fluctuations in Bitcoin`s prices as payments are settled.) The unexpected move turned out to be a PR stunt. Bukele is already a very popular politician in his country, thanks in part to his unbridled spending policies.