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Happy 'B-Day,' El Salvador

Starting Tuesday, bitcoin can be used as legal tender nationwide
By Jenn Gidman,  Newser Staff
Posted Sep 7, 2021 8:19 AM CDT
Happy 'B-Day,' El Salvador
A government-run Chivo machine that will soon exchange cash for bitcoin, at a bank in San Salvador, El Salvador, on Wednesday.   (AP Photo/Salvador Melendez)

(Newser) – Earlier this year, El Salvador became the first country to give bitcoin the green light as legal tender. And Tuesday is "B-day," the day that legislation goes into effect, with Salvadorans now able to use the cryptocurrency in any transaction. Residents in the country—which has had the US dollar as its national currency since 2001—are now able to use bitcoin at any business, except for those that aren't yet up to speed technologically and able to accept the currency. "It's a pretty monumental step in the evolution of bitcoin," research chief Garrick Hileman of Blockchain.com tells the Wall Street Journal.

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To help promote the new payment protocol, the government has launched the digital wallet Chivo (slang for "cool" in El Salvador) and will give every citizen who downloads it $30 in free bitcoin. Salvadorans will be able to take out funds in cash from 200 ATMs and 50 "consulting centers" around the country, per the New York Times. However, despite the attention-grabbing headlines and an enthusiastic embrace from El Salvador President Nayib Bukele, not everyone is keen on the change. Creditors, for example, including the International Monetary Fund, have warned that using cryptocurrency that's able to evade authorities can make the system vulnerable to eyebrow-raising transactions.

Hileman adds to the Journal that hackers may also be tempted to raid the funds in the centralized Chivo wallet held by the government. Some business owners, meanwhile, don't like the way the plan was rolled out, complaining it emerged quickly without input from the private sector or stakeholders, with regulations that don't seem strong enough, and that not everyone is able to accept the cry. "If a client comes to pay with bitcoin, I'm not ready," says clothing chain owner Jorge Hasbun, who also helms the nation's Chamber of Commerce and Industry.

Others have more generalized fears about bitcoin's stability: A recent poll finds that 80% of Salvadorans have little to no confidence in the cryptocurrency, which the BBC notes was introduced amid a climate of "fear and excitement." "My mother believes that bitcoin is a thing of the devil," the head of a family-owned metal bed frame manufacturer tells the Journal. But Bukele is making a hard push, noting that bitcoin will give Salvadorans—the majority of whom don't have a bank account—a wider entry into the economy. "Historical," he tweeted early Monday, noting some tech glitches on the first day and asking people to be patient. (Read more bitcoin stories.)

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