Bumpy start to the Bitcoin era in El Salvador

A Bitcoin city at the foot of an energy-generating volcano, financed by a multi-billion dollar bond: El Salvador was the first country in the world to introduce the cryptocurrency and has big plans. However, the whole thing tends to pass by many citizens.

More than half a year after Bitcoin was introduced as legal tender for the first time worldwide, the balance sheet in El Salvador has so far been mixed. Tourism is on the up: Many hotels in the Central American country are fully booked over Easter, said Minister of Tourism Morena Valdez on Thursday on the TCS TV station. Since the introduction of the digital currency on September 7, tourism has increased by 30 percent, she had announced ten days earlier. Tourists interested in Bitcoin also stayed longer and spent more money. There is also great interest in investments from abroad.

However, the issue of a ten-year Bitcoin bond worth one billion US dollars, which was planned for March, has not yet materialized – according to Finance Minister Alejandro Zelaya, the right moment is being awaited. According to plans by the authoritarian President Nayib Bukele, the bond is intended to finance, among other things, the construction of a Bitcoin city at the foot of the Conchagua volcano. The energy for mining the cryptocurrency is to be generated by a geothermal power plant on the volcano.

On September 7th, El Salvador’s bitcoin law went into effect. According to him, any trader who is technically able to do so must accept the cryptocurrency. Taxes can also be paid in it. The digital purse Chivo was introduced – whoever downloaded it got a starting credit worth 30 US dollars (almost 28 euros). In addition, around 200 Chivo ATMs have been set up. According to media reports, however, the Chivo system is suffering from glitches.

There was also a problem with the acceptance of the new currency among the population. In a survey conducted by the University of UCA in December A total of 70.1 percent of the nearly 1,300 participants stated that they had little or no trust in Bitcoin. According to their own statements, more than a fifth did not know what Bitcoin is. About 70 percent of the residents of El Salvador, where since 2001 the US dollar has been used as a means of payment instead of its own currency, do not have a bank account, according to the government.

The Chamber of Commerce and Industry surveyed the country’s small and medium-sized enterprises in January. Of them, almost 92 percent said Bitcoin adoption had no impact on their business. 86 percent had not used the means of payment.

The International Monetary Fund (IMF), with which El Salvador is negotiating a $1.3 billion loan package, asked the country in January to withdraw Bitcoin’s status as legal tender because it was too financially risky. The cryptocurrency is subject to violent price fluctuations.

If you are interested, also read the DIGITAL TELEVISION article: “Regulatory challenges surrounding Bitcoin”.


Source: DIGITAL FERNSEHEN by www.digitalfernsehen.de.

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