The decision to be the first country to allow Bitcoin to be legal tender appears to be finding favor with the majority of El Salvador’s citizens, as evidenced by the growing adoption.
The country’s president, Nayib Bukele, the protagonist of this revolutionary decision, was the one who broke the news. On November 14, he enthusiastically announced that Salvadorans are the world’s leading Bitcoin users.
The most recent was the German ambassador to El Salvador, Peter Woeste, who posted a photo on Twitter of himself making a purchase using Bitcoin.
After some initial difficulties and some protests from the citizens, it now seems that the adoption of Bitcoin is becoming more and more common, even for making small purchases in the Central American country.
El Salvador attracts investors to Bitcoin.
Over the past two months, the government has tried to make the adoption of cryptocurrency and related activities such as mining as easy as possible. And many foreign investors in crypto seem to be interested.
The vice president of El Salvador, Félix Ulloa, said a few days ago:
“People from Asia, South America, Russia are interested in investing in El Salvador”.
To attract crypto investors and miners, Bukele has always used his favorite medium, Twitter, to announce favorable incentives and laws, such as lifting the capital gains tax on Bitcoin or granting immediate permanent residency to all currency entrepreneurs. companies interested in transferring their business to the Central American country.
Ulloa, in an interview with the British newspaper Politico, said the following:
“A Swiss investor told me he is interested in bringing in around 13,000 to 15,000 machines to produce Bitcoin.”
But there are still problems.
There are still many problems, one of them being the large expenditure of energy required by mining, which the country would like to solve with a project to explore geothermal energy from volcanoes.
Another problem is the potential use of the mine by drug cartels in an area where drug trafficking is widespread, according to Ricardo Navarro, head of the environmental NGO Salvadoran Center for Appropria:
“700 kilos of cocaine recently seized by Spanish authorities, who came from El Salvador.”
Finally, there is the big problem of Bitcoin’s extreme volatility, which can affect the purchasing power of citizens. A problem that even Vice President Ulloa admitted.
“How can you guarantee regular payments? You might be at $66,000 now and tomorrow it might be at $40,000, and that’s one of the criticisms of that coin.”
In an attempt to resolve this concern, the government will bid for anyone who can offer a financial contract to keep the value of Bitcoin stable for payments of salaries and pensions.
But these future contracts could also be used to cover any losses to public coffers, considering that the treasure currently owns about 700 Bitcoin.