Bitcoin in El Salvador: Between price drops and protests

Bitcoin’s first day in circulation as legal tender saw five protests take to the main streets of San Salvador to reject its implementation.

This Tuesday (July 9, 2021) in El Salvador, the launch of bitcoin as a currency exchanged for the U.S. dollar was marked by a drop in the cryptocurrency price and the rejection of thousands of people who took to the streets to protest.

El Salvador on Tuesday became the first country in the world to offer flat money to cryptocurrencies after allies of the ruling party and Nayib Bukele executive approved a bitcoin law in the Legislative Assembly last June. According to the regulations, the use of Bitcoin as a payment method is mandatory, and all economic agents are obliged to accept this cryptocurrency.

The price drop and the failure of the Chivo wallet
On the eve of the aforementioned laws taking effect, the El Salvadoran government purchased 400 bitcoins in at least two operations, totaling more than $21 million, at a price of more than $52,000. However, the cryptocurrency fell more than 17 percent on Tuesday, taking the digital currency’s value as high as $43,050. According to various platforms, the declines have moderated over time, and at least after 12:00 local time (18:00 GMT), the decline was more than $46,000.

In the framework of this fall, Bukele posted on his social network that El Salvador has acquired another 150 bitcoins and that the country has purchased 550 units of the cryptocurrency. The government did not detail the criteria used to make these purchases, how the purchases were made, and whether the purchases were made on exchanges or from large holders of cryptocurrencies.

The Bukele government announced that starting at 00:00 local time (06:00 GMT) on Tuesday, people in El Salvador will be able to download a government e-wallet called Chivo Wallet on their mobile phones. However, a few hours later, the president posted on his Twitter account that “the system is offline while server capacity is increasing.” The president added: “It’s a relatively simple problem, but it’s impossible to get through a connected system. Solved.” At 11:00 local time (17:00 GMT), Bukele announced that the app was now available for download. Information about the development and financing of the wallet and ATM network has not been disclosed.

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