The official adoption of Bitcoin as legal tender in El Salvador is fast approaching. Meanwhile, the government is making efforts to be ready and is installing 200 Bitcoin supported ATM’s
The launch is getting closer
September 7 in the calendar of Salvadorans will be a special day. That’s when residents of this small country will officially begin using Bitcoin as the second legal tender, next to the U.S. dollar. For this purpose, it was necessary to prepare the appropriate infrastructure. It also includes special ATMs, allowing withdrawals from wallets.
As announced by President Nayib Bukele, the government is in the process of installing 200 devices that will support the national wallet called Chivo. With them, it will be possible to withdraw and therefore convert Bitcoin to dollars. These transactions will be devoid of commissions. An additional element of support is expected to be the 50 financial branches that are being created to facilitate the handling of crypto funds. Bukele added that these types of solutions will save Salvadorans as much as $400 million a year that was being lost due to high transaction fees charged on remittances from abroad.
The road to Bitcoin as legal tender
El Salvador is the first country in the world to officially adopt Bitcoin as legal tender. The decision to do so was approved by the local government back in June. It was taken as a response to the daily economic difficulties faced by the country’s residents. Most of them are excluded from the banking system, lacking the ability to open an account. A sizable portion of Salvadoran citizens also work outside the borders. While supporting their families, they send their funds to them. These in turn are burdened with the aforementioned bank commissions, which deplete the wallets of the citizens. Strike, a company that provides infrastructure solutions for cryptocurrencies came to the rescue. It has created the Chivo wallet, which can be obtained by any Salvadoran citizen, and with it Bitcoin equivalent to $30.
We wrote on the above topics in two separate articles: “El Salvador first country to accept Bitcoin” and “El Salvador government distributes $30 in BTC to every citizen”. Be sure to take a look to learn more!
Skeptical attitude of financial institutions
Without a doubt, the acceptance of Bitcoin as a legal tender in the country is a real experiment. The event is generating positive feedback from the cryptocurrency community, but it is also met with negation from other quarters. Many critics point to Bitcoin’s high volatility as a drawback to such an arrangement. The International Monetary Fund has refused to support El Salvador in implementing the new infrastructure. Banks, such as JP Morgan, for example, are also expressing concern about this.
More importantly, the results of a survey conducted by the University of El Salvador indicate that the majority of the country’s population does not understand Bitcoin and is negative about the changes being made.
The initiative is very interesting, and as you can see there is a lot of controversy as well. We will soon see how much El Salvador and its people stand to gain from the national adoption of Bitcoin.