2021 will likely go down in the history books as one of the most interesting years for Bitcoin (BTC), given its recent uptake by billionaires and adoption by major institutions, not to mention El Salvador’s move to make it legal tender.
In the case of El Salvador, it seems as if the entire world is watching this experiment to see whether it will be a complete success or failure for the Central American nation.
With the announcement on September 7 of the official implementation of Bitcoin as a legal tender in El Salvador, the wave of protests in the country against the move has raised doubts and uncertainty about how the new law will be implemented.
From the arrest of individuals critical of the Salvadoran government over the new law, to the wave of citizens across the country protesting the legal status of bitcoin, the original cryptocurrency is facing some headwinds.
How Bitcoin became legal tender
It all started in early June after Salvadoran President Neb Bukele announced in a tweet that the country’s legislature had passed a bill making bitcoin legal. The law was scheduled to go into effect on September 7 and would see 4.5 million citizens of the country be able to make purchases with Bitcoin in stores across the country.
In his announcement, Bukele said that once a formal bill to legal tender for Bitcoin is passed, “Chivo ATMs” — Chivo being the name of El Salvador’s official BTC wallet — will eventually be “everywhere” in the country. This will allow Salvadorans to withdraw Bitcoin in cash without incurring any commissions on their holdings, as is the case with services such as Western Union.
Furthermore, Bukele assured citizens that no one will be forced to use Bitcoin. In a statement, the 40-year-old president said, “Anyone can always line up at Western Union and pay a commission.”
What if someone doesn’t want to use Bitcoin? [Well] Don’t download the app and continue to live your normal life. “No one will take your money,” he said.
The first wave of resistance
After the announcement, a group of protesters called the Popular Resistance and Rebellion Bloc (BRRP) emerged to protest against the bitcoin law.
“President Najib Bukele has passed a law making cryptocurrency legal in the country without proper consultation with the people,” said one of the activists.
Although the protest group has highlighted complexities such as bitcoin’s volatility as reasons for caution, their main claim is that the law primarily serves large corporations linked to alleged money laundering for corrupt officials.
“Bitcoin only serves some big business people, especially those linked to the government, to launder illicit money,” one protester said.
A letter from the BRRP group stated that “entrepreneurs who put their capital into Bitcoin will not pay taxes on their profits and the government will spend millions in taxes to implement the entire campaign.”
In fact, the Bitcoin Legal Bidding Bill includes some interesting proposals such as a zero capital gains tax on BTC. The bill also promised investors permanent residence in the country with three BTC investments in El Salvador.
Mario Gomez arrested
As the controversial Bitcoin bill became law on September 7, both supporters and detractors continue to emerge with the latest incident related to the law being the arrest of Mario Gomez.
According to several local news outlets in El Salvador, the local police arrested Mario Gomez – a computer and cryptography expert as well as a strong critic of the government – and held him for a few hours before releasing him.
Gomez is known to regularly post on social media opposing the government’s move to legalize bitcoin. Observers such as Steve Hanke, an economist from Johns Hopkins University, have criticized Gomez’s arrest as an “authoritarian police tactic at work.”
“Mario’s arrest illustrates the government’s fragility in terms of bitcoin law enforcement but confirms something much more serious,” said Hector Silva, an advisor to the mayor’s office in San Salvador.
“They are ready to manipulate any necessary institutions to keep critical voices out of the way,” Silva added.
Although the police released a statement saying Gomez was being detained as part of a financial fraud investigation, news reports claimed he was arrested without a warrant and attempted to seize his phone and computer.
Just before Gomez’s arrest, some retirees in El Salvador took to the streets to protest, worried that the government was using cryptocurrency to pay their pensions.
Speaking to reporters, one of the protesters – which included veterans, disabled retirees, working and retired people – said, “We know this currency fluctuates wildly. Its value changes from second to second, and we won’t control it.”
While Bukele promised that Bitcoin use in the country would be voluntary and that salaries and pensions would still be paid in US dollars, the protesters still highlighted the lack of knowledge of the technology.
Citizens have also complained that there is too little explanation from officials about the pros and cons of Bitcoin. We do not know the currency. We don’t know where it came from. We don’t know if it will make us a profit or a loss. “We don’t know anything,” added one Salvadoran.
In response, Bukele’s management stated that the use of Bitcoin is not mandatory and that the necessary training and other alternatives to Bitcoin will be provided.
Although President Bukele has incredibly high approval ratings, recent Bitcoin law polls show a widespread lack of support for this measure. A poll conducted by Jose Simeon Canas at the University of El Salvador showed that as many as two-thirds of respondents are inclined to move to repeal the law, and more than 70% favor the US dollar over bitcoin.
International institutions such as the International Monetary Fund have also warned of the macroeconomic, financial and legal issues arising from El Salvador’s adoption of Bitcoin.
Siobhan Morden, Head of Latin America Fixed Income Strategy at Amherst Pierpont, said that “Bitcoin’s plans under an increasingly authoritarian regime are likely to heighten concerns about corruption.”
On the flip side, others remain optimistic that the new law will eventually benefit Salvadorans given that the country’s economy is highly dependent on remittances sent by migrants abroad. Last year alone, the country’s total remittances amounted to $6 billion, which is one-fifth of the gross domestic product.
“El Salvador’s adoption of bitcoin as legal tender by law provides the country with some choices in financial and sovereignty matters,” said Alexander Blum, Managing Director of Two Prime.
His sentiments were echoed by Alberto Echigaray Guevara – an artist and entrepreneur – who said: “President Bukele’s Bitcoin Act is not only trying to make international money transfers cheaper and easier for the unbanked 70% of his population, but also creates a new, new economic hub. The Central American Remittance Platform.”
Adrian Pollard of HollaEx told Cointelegraph, “It’s not unusual for new technology rollouts to have bugs and applications but that’s exactly why it’s voluntary.”
“I suspect there will be more bumps along the way for El Salvador but it will be worth it in the long run. In fact, I think other South American countries are not far behind and will follow,” Bullard added.
قد يهمك أيضاً :-
- ديون Evergrande تؤثر على التشفير ... والانخفاضات الحادة لـ "Bitcoin"
- تحيا مصر | "منحازة بلا حدود تجاه الشعب" .. تعليق من جمعية المؤلفين والملحنين على دعم الرئيس السيسي للفنانين
- Bengaluru crypto startup Unocoin has launched a feature to pay highway tolls with Bitcoin
- بعد 5 جولات ، ترتيب صلاح بين منافسيه في الدوري الإنجليزي الممتاز
- تقوم شركة أسيوط لتكرير البترول بتوريد منتجات للسوق المحلي بقيمة 945 مليون دولار خلال 2020/2021
- صورة جماعية للأهلي مستبعد من مباراة السوبر برعاية محمد محمود - اليوم السابع
- أسعار العملات المشفرة اليوم .. خسائر "مجنونة" تسحق "بيتكوين" و "تشين لينك"