El Salvador became, in September, the first country to make bitcoin legal tender. According to President Nayib Bukele, nearly half of the population now uses Chivo, the crypto wallet made available to them to use bitcoin on a daily basis. An authentic figure, but to take a step back.
It has become a symbol in the crypto sector: on September 7, El Salvador became the first country to make bitcoin legal tender. A risky bet (even if the dollar also retains the status of legal tender in the country). The project is, however, fiercely defended by Nayib Bukele, the country’s president.
This one revealed on October 3, on Twitter, that 3 million Salvadorans now use Chivo, the digital wallet launched by the state so that the population can use bitcoin on a daily basis. A very high percentage: the Salvadoran population being 6.5 million people in 2020, this means that 46% of them have downloaded the Chivo application. Does this mean that the Salvadoran population massively adheres to bitcoin? Nothing is less sure.
– Nayib Bukele 🇸🇻 (@nayibbukele) October 3, 2021
Bitcoins offered to Salvadorans
To facilitate the acceptance of bitcoin, President Nayib Bukele offered every citizen of the country $ 30 in bitcoin, to be used on Chivo. In a country where the monthly GDP per capita is $ 300, this is far from a negligible amount. Some have therefore downloaded the Chivo application for the sole purpose of recovering these $ 30 offered, and not for the purpose of using bitcoin on a daily basis.
The fact is that the Salvadoran government has shown little education on this transition to bitcoin. ” The law was passed extremely quickly, without technical study or public debate ”, Denounced the Salvadoran economist Ricardo Castañeda in the columns of The Guardian. While this is a project with serious implications and which has never been attempted elsewhere, the Salvadoran president has indeed allowed only three months to elapse between the approval of the bitcoin law and his Coming into force. Result: in a poll carried out this summer, 45% of Salvadorians questioned said “ know nothing To bitcoin and how it works.
Salvadoran President Nayib Bukele hopes that making bitcoin legal tender will help the country’s economy, by making it more accessible (70% of citizens currently do not have a bank account), and by reducing fees for transferring money from abroad to the country (this represents no less than 20% of GDP).
The bitcoin law is a risky bet
However, making bitcoin legal tender is not a trivial matter. The price of cryptocurrencies is quite volatile. For large companies or people with high purchasing power who only bet part of their income on it, this is not necessarily dangerous. But if weaker companies and less fortunate individuals bet a large chunk of their funds in bitcoin, a drop in the price can put them in a difficult position.
The widespread adoption of cryptocurrencies may threaten the macroeconomic stability of El Salvador, weaken its monetary policy and make prices in the domestic market unstable, the International Monetary Fund warned more generally in July. Salvadorans who are skeptical, who decide not to use bitcoin, will therefore not be immune from the consequences that this cryptocurrency could have on their economy.