WHAT HAS BEEN THE RESPONSE TO BITCOIN BECOMING EL SALVADOR’S NATIONAL CURRENCY?
Proponents of El Salvador’s decision have hailed the move as the progressive future of money.
Critics, however, have derided it as little more than a publicity stunt by Bukele.
More troublingly, they say the move poses substantial financial risks to ordinary Salvadorians and their country, as cryptocurrency is an infamously volatile market.
Indeed, the nation’s cryptocurrency rollout got off to a rocky start yesterday with Bitcoin plunging more than 10 percent, seeing its value drop from $52,5000 to $44,000, on its first day as El Salvador’s official currency.
But Bukele has argued that adopting Bitcoin will allow more Salvadorians, about 70 per cent of whom don’t have bank accounts, into the formal economy.
“Who’d be against something that helps the people and doesn’t do any harm?” he said of his critics. “They’re probably politically motivated.”
He also argued that it would make it faster and cheaper to receive money from family living abroad.
El Salvador’s economy relies heavily on the remittance market, representing around 20 percent of the nation’s GBP, or around $6billion annually, according to Forbes.
Around 95 per cent of remittances are sent from Salvadorans working in the US to their families back in their native country.
But service charge fees for such transfers can make up a significant chunk of the portion sent, particularly with smaller transfer amounts.