El Salvador is less than two weeks away from making the cryptocurrency Bitcoin one of its official currencies, the other being the United States dollar. This unprecedented move will make El Salvador the first country in the world to use the cryptocurrency as a national currency, and while some people are excited about what the move, many Salvadorans are expressing outrage.
The move is seen as an incredibly risky one for the already struggling economy in El Salvador. Bitcoin is an incredibly volatile currency, prone to sudden, unforeseeable drops in value. Although Bitcoin has also been known to hit tremendously high peaks in value, its instability is why no other country has ever taken the leap with using it as a national currency before.
President Nayib Bukele argues that using bitcoin as an official currency will bring foreign investors, make financial services less expensive, and reduce the cost of receiving and sending remittances, which peaked at $6 billion in 2020. Bukele’s interested in foreign investment is connected to the volcanoes across El Salvador, which investors could use to develop geothermal energy required for mining bitcoin.
The instability of bitcoin provokes protests in El Savador
But if the unpredictable digital currency plummets, all of El Savodor’s $26 billion economy could be in jeopardy. The nation’s central bank, Banco Central de El Salvador, is currently in over $19 billion dollars of debt.
“Adopting bitcoin as legal tender puts us on a roller coaster,” says Carlos Acevedo, who was governor of El Salvador’s central bank from 2009 to 2013.
Hundreds of Salvadorans across the country share this fear, and have taken to the streets to protest the Bukele’s move to take on the currency.
“We know this coin fluctuates drastically. Its value changes from one second to another and we will have no control over it,” said Stanley Quinteros, who is part of the Supreme Court of Justice’s workers’ union in El Salvador. The protestors say that the move is almost universally opposed by Salvadorans, and is perceived as an appeal to foreign entities and elites interested in corruption.
The hesitancy surrounding El Salvador’s adoption of bitcoin also comes from those within the cryptocurrency sector, and is not necessarily the product of an opposition to cryptocurrency itself– it is a skepticism over the country’s ability to integrate the digital currency into such a key role:
“The blockchain-related infrastructure that can carry digital currencies in most Central and South American countries and regions is not complete, including wallets, exchanges, etc. This is also the direction of our investment focus. We think there is huge potential and value here for fostering crypto adoption throughout the region. El Salvador’s adoption of bitcoin has brought concern from officials in developed nations as well as from international NGOs who often describe bitcoin as having few redeeming public interest attributes,” said Maggie Wu, CEO of blockchain venture capital group Krypital Group.