The project, spearheaded by the charismatic and popular young president Nayib Bukele, aims to save Salvadorians the $400 million spent each year on commissions on remittances, mostly from the United States.
El Salvador received over $6 billion in remittances last year, accounting for 23 percent of its GDP, one of the highest percentages in the world.
According to polls, Salvadorans are suspicious about bitcoin and concerned about its volatility, which opponents believe may put financial institutions at risk of legal and financial concerns. Yet some residents are optimistic.
"It’s going to be advantageous… We have relatives in the United States. and they can send money without fees, whereas banks charge to send money from the U.S. to El Salvador," said Reina Isabel Aguilar, a store owner in El Zonte Beach, about 49 km (30 mi) southwest of the capital San Salvador.
El Zonte is a part of the "Bitcoin Beach" initiative, which seeks to make the city one of the first bitcoin economies in the world.
In anticipation of the launch, the government has already installed ATMs for its Chivo digital wallet that will allow cryptocurrencies to be converted into dollars and withdrawn commission-free, Bukele, on the other hand, attempted to dampen expectations of rapid results on Monday, urging patience.
"The El Salvador bitcoin method, like other advancements, has a learning curve. This is true of all future pathways, and not everything can be accomplished in a day, much alone a month "Bukele said it on Twitter, a forum he frequently uses to brag about his accomplishments or chastise his critics.
On Monday, El Salvador bought its first 400 of the cryptocurrency, temporarily pushing bitcoin prices up 1.49 percent to more than $52,680. The cryptocurrency is notoriously volatile. Last spring alone, it surpassed $64,000 in April and fell almost as low as $30,000 in May. View Bitcoin current price and chart here
Some analysts are concerned that the decision to make bitcoin a legal tender on par with El Salvador’s chances would be hampered by the US currency, which is pursuing a more than $1 billion financing arrangement with the International Monetary Fund (IMF).
After Mr. Bukele’s bitcoin law was approved, ratings agency Moody’s downgraded El Salvador’s creditworthiness, while the country’s dollar-denominated bonds also came under pressure.
But Bukele, who doesn’t shy away from controversy, retweeted a video Monday showing his face superimposed on actor Jaime Foxx’s in a scene from Django Unchained, Quentin Tarantino’s film about American slavery. The video showed Bukele whipping a slave trader who had the IMF emblem on his face.
Bukele later deleted the retweet.
His own tweet said, "We must break the paradigms of the past. El Salvador has the right to move forward to the first world." (Reporting by Anthony Esposito and Nelson Renteria; additional reporting by Wilfredo Pineda in El Zonte, El Salvador; editing by David Gregorio)
The adoption rate of cryptocurrencies has skyrocketed: over 800% in one year. Contrary to what one might think, it is not in the United States or China that it is the highest.
Cryptocurrencies are popular on social networks. But exactly how much are they used and where? That’s what the 2021 Global Cryptocurrency Adoption Index that Chainalysis released this August 18 reveals. The analytics firm says the sector has grown by leaps and bounds: the adoption rate of crypto has increased by 881% over the past 12 months.
The reasons users are turning to cryptocurrencies differ greatly from country to country. "In emerging markets, many people turn to cryptocurrencies to protect their personal savings in a deflationary environment, send and receive funds, and conduct business transactions," says Chainalysis. Conversely, in countries in North America, Western Europe and East Asia, the rise of cryptocurrencies is mostly driven by institutional investors.
The countries with the strongest adoption of crypto-currencies are not necessarily the ones we instinctively think of. While China and the United States have been in the news a lot on this topic, they are thus not the countries with the strongest crypto adoption rates.
Chainalysis took several factors into account in order to establish its ranking. According to the firm, ranking countries based solely on transaction volume would not have given an accurate landscape of the situation: it would mostly highlight countries where the adoption of cryptocurrencies by businesses and institutions is strong.
Indeed, these entities are the ones moving the largest amounts of money. "These players are crucial, but we also wanted to see in which countries the rate of adoption by the public is significant and focus more on transactions and individual Chainalysis says that "savings are more important than trading and speculating.".
Source : Chainalysis
For this reason, the Global Cryptocurrency Adoption Index 2021 ranks the 154 countries surveyed according to three parameters:
The perceived value on the blockchain is weighted according to the purchasing power parity per capita method. If the total perceived value of two countries is equivalent, the country with the lower per capita purchasing power will be ranked higher
The value of "retail" transfers on the blockchain, weighted according to per capita purchasing power parity. To estimate the activity of non-professional users, Chainalysis focuses here on transactions worth less than $10,000.
Trade volumes on Peer-to-peer platforms, weighted by purchasing power parity per capita and by the number of Internet users. As Chainalysis points out, exchanges on P2P platforms are not mentioned on blockchains, but they still represent a significant percentage of crypto activity, especially in emerging countries.
If we take these different factors into account, we see that the three countries with the highest adoption rate of cryptocurrencies are Vietnam, followed by India and Pakistan. The United States is finally only in 8th place (even though it was the country that made the most profit from bitcoin in 2020). As for China, the world’s leading mining hub until it ordered the closure of most crypto farms, it only comes in 13th, in terms of cryptocurrency adoption.
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