Bitcoin has been the official means of payment in El Salvador since September 7th. Even if many people from the crypto scene celebrated this move, there is also plenty of criticism of President Nayib Bukele’s government.
Just three months passed between the announcement, the submission of the draft law and the introduction of the law. It is not known how much thought was given in advance by those responsible about the effects of this law.
It is known, however, that the World bank and the IWF (International Monetary Fund) were anything but enthusiastic about the Central American country’s project.
Is the IMF loan at risk?
Originally, El Salvador applied for a $ 1 billion loan from the IMF. The IMF had already announced in June that it would check this again if El Salvador should actually introduce Bitcoin as legal tender.
Investor worries are growing. Because El Salvador’s creditworthiness is also at stake. El Salvador bond to US Treasury bond spreads hit a on Thursday Record high.
With the introduction of Bitcoin as legal tender, El Salvador hopes to gain independence from the USA, among other things. So far, the US dollar has recently been the only official currency in the country.
However, not all residents of the country are satisfied with the new law. Recently, some residents demonstrated against the new law and demanded the abolition of Bitcoin in El Salvador. In the course of the demonstrations, the participants also destroyed a Bitcoin machine, among other things.
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The United States plays an important role in the IMF’s decision on loans. However, the US is not impressed by Bukele’s authoritarian leadership style and the introduction of bitcoin as legal tender.
Meanwhile, El Salvador has bought a total of around 550 BTC. However, the Bukele government did not announce whether the state would like to buy more Bitcoin.
Will Bitcoin establish itself as legal tender?
It took a little over twelve years for Bitcoin to be recognized as an official currency in a state. In the early years, Bitcoin was still ridiculed by many and viewed as a gimmick for nerds.
In 2010, May 22nd went down in history as “Bitcoin Pizza Day”. One user paid 10,000 BTC for two pizzas.
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However, many users in the crypto scene are not sure whether Bitcoin is suitable as a means of payment. In terms of fees and transaction speed, the oldest cryptocurrency cannot even come close to competing with competing cryptocurrencies.
Therefore, many consider Bitcoin to be the digital equivalent of gold. The next few years will certainly show whether Bitcoin can and will prevail as a means of payment. At least large companies and institutions have also noticed that the crypto sector is more than just a gimmick.
The introduction of bitcoin as a means of payment in El Salvador will nevertheless show the impact a cryptocurrency can have on a country’s economy. In order to be able to really assess this in the end, it is above all important that it is not a short-lived project.
It is also questionable whether El Salvador will have this patience with Nayib Bukele when the pressure arises. In the end, it is still a historic moment for the crypto world.
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