Friday, September 17, 2021

Using bitcoin as legal tender

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WHen asked When someone tries to pay her with Bitcoin, a woman selling coffee and pastries in San Salvador, the capital of El Salvador, replies, “Thank God,” and refuses to do so. A man who sells soup for lunch erases the idea with a laugh. By phone battery and low morale dinner time, correspondents will be pointed to a bar called Leyendas with the Strike logo, a digital Bitcoin wallet, on the wall. However, attempts to pay with Bitcoin are facing confusion. The owner of the bar that manages the wallet is missing. After some desperate text, he sends the wallet address. Finally, $ 12.50 worth of 26,618 Satoshi (one hundred millionth of Bitcoin) was exchanged for beer.

On September 7, Bitcoin will become legal tender in El Salvador alongside the dollar. The 6.5 million Central American country is the first to attempt such a feat. Those who planned to use Bitcoin a week before the big day were an exception, not a standard. Three-quarters of Salvadorans surveyed by polling firm Disruptiva in July were skeptical of plans to adopt Bitcoin. Two-thirds were willing to pay for it, and just under half knew nothing about it.With the World Bank IMF It warns against adoption, citing macroeconomic stability and the potential impact of Bitcoin on environmental costs.

Fiat currency is usually defined as the money a court must accept to settle a debt. However, El Salvador’s Bitcoin law goes a step further, stating that businesses need to accept cryptocurrencies as payments for goods and services. It also came into effect very quickly. Nayib Bukele, president of the country that controls the majority in the legislative assembly, announced plans to make Bitcoin legal tender at the cryptocurrency conference on June 5. The law was approved after only three days.

Scholars claim that the move is just a stunt. A sob to Ibra Jim and Youssef Bukele, brothers of the president who are crypto enthusiasts. But the president argues that the move will help El Salvador win foreign investment and reduce the cost of remittances. He may not be completely wrong. Gambit can seduce crypto investors with deep pockets (although it can discourage traditional investors). And that experience may provide a case study of whether one of Bitcoin’s long-promoted benefits will benefit the general public.About 2 million Salvadorian diasporas send 20% worth of remittances GDP Home every year. However, cross-border bank transfers and wire transfers are slow and expensive. Bitcoin transfer from wallet to wallet is quick and free.

This attempt will probably also reveal the limits of Bitcoin. Many locals are, of course, afraid of its volatility and unsuitable for payments and debt. Those who accept it, like Leyendas, do not quote the price in it, but convert it from dollars at the point of sale. It can also incur unexpected charges and prevent its use. There are 200 automatic Bitcoin cash deposit machines nationwide to enable digital wallets to convert cash dollars into Bitcoins.What is used by economist There was a 5% fee. “I’m not going to use it,” says Irma Gómez, who runs a cafeteria near something like that. ATM It is located in Santa Tecla, a town just outside San Salvador. But she is also intrigued. “Let people try it.” ■■

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This article was published in the printed version of the Treasury and Economy section under the heading “Satoshisforcervezas”.

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