President Najib Bukele’s recent announcement of converting bitcoin to legal tender in El Salvador over the weekend has raised many concerns.
During the presentation of the new Central Reserve Bank (BCR) payment platform, Miguel Catan, Minister of Trade and Investments, Transfer 365, said that bitcoin has been used for several years as a payment method in a small area of El Salvador “where you can buy virgins, tomatoes, minutes and absolutely everything in That little area of El Zonte.”
He explained that the use of this “virtual currency” should not generate fear because its use would be “entirely discretionary.” He also added that “the dollar will still be the legal tender in El Salvador, but operations can be conducted with bitcoin clearly linked to its value against the dollar.”
The questions that arise before this monetary initiative relate to the use and volatility of the currency. “They say it is volatile because you don’t know how much it is worth from day to day, don’t worry, you will buy and sell in dollars. If you want to use bitcoin, you will use it, if you don’t want to use it you will not use it,” Kattan said. The world is turning around today.”
“They say: How can you pay for a tomato with 0.000000001 bitcoins? You will pay 20 cents of the tomato, period. That’s what the person will get, 0.20 cents of bitcoin. That shouldn’t worry us.”
Kattan noted the fear that dollarization generated at that time “the same private sector associations such as COEXPORT, ASI and the Chamber of Commerce were opposed,” he said. “There was no reason to do that and today there is no reason to get rid of the dollar, so there should be no fear of de-dollarization.”
Finally, he said that in light of the fear of wrongdoing, the bill (which will be issued soon) will be drafted “in a way that does not allow criminal acts such as money laundering and meets the requirements for carrying out fully transparent transactions.”
He also said, “What the law will say at the end of the day is that you can pay if the person collecting bitcoin accepts and the person making the payment wants to do so with bitcoin.”
The government will build the infrastructure to use Bitcoin
El Salvador’s president, Neb Bukele, said Monday that a “satellite infrastructure” will be built in the country to use bitcoin in rural areas with connectivity problems.
“Satellite infrastructure will be built so that Salvadorans in rural areas can connect to the Internet and the Bitcoin network in places where connectivity is poor,” the president wrote on Twitter.
He added that the Blockstream initiative “will contribute its technology to make the nation a model for the world.”
Bukele stepped into the Bitcoin Forum 2021, the largest meeting in the history of virtual currencies held in the United States, and announced the initiative.
The president has enough votes in Congress to approve the measure, which has sparked conflicting opinions in the Central American country.
In El Salvador, the Salvadoran colon, which is no longer in use, and the US dollar are considered legal tender. If the measure is implemented, it will become the first country in the world to adopt this cryptocurrency.
One of the uses that arises for this encryption, according to the president, is to remit money transfers sent by Salvadorans in the United States to avoid paying commissions.
However, it has not been clarified how Salvadoran users will not pay the commissions generated by the Bitcoin network itself.
Nor was it indicated what measures the state would take to prevent the use of cryptocurrencies in criminal activities, such as extortion by gangs.