Despite its bold goals, the ambitious experiment came to a halt just before midnight, when Salvadoran President Néib Bukele complained that bitcoin apps were not available on various internet platforms including Apple and Huawei.
Using his Twitter account, Bulele urged online stores to stock the app, or digital wallet, known as Chivo, and Huawei later began making it available. However, when the government found that it was unable to cope with the high number of registrations, they disconnected the app so it could connect to more servers.
Even so, Bukele retweeted videos on social media of people making payments in El Salvador using Bitcoin at McDonald’s Corporation and Starbucks Corporation by afternoon as the app rolled out on new platforms. Carlos Garcia, who gave advice on how to use the new currency at a booth in a shopping mall in San Salvador said, ‘El Salvador is taking a great step forward today.’
Promising $30 to each user, Bukele has pushed for the adoption of bitcoin, stating that it will help Salvadorans save $400 million a year in remittance commissions while allowing them to access financial services.
Also, Bukele tweeted that El Salvador must break the paradigms of the past so it can progress towards the first world. Bukele, is one of the most popular presidents in the Americas, but his administration is under fire for eroding democracy and didn’t seem to be able to handle it well !
On Tuesday, over 1,000 people demonstrated against the adoption of bitcoin in San Salvador, burning tires and setting off fireworks in front of the Supreme Court. As the value of the currency fluctuated on Tuesday, the government bought another 150 bitcoins worth around $7 million.
In El Salvador, where nearly half the population does not have internet access, many more only have spotty internet access, even the poorest may struggle to access the technology needed to make bitcoin work. The adoption of bitcoin may fuel illicit transactions and financial instability, according to some. The situation has already sullied El Salvador’s chances of getting a loan from the International Monetary Fund (IMF) of over $1 billion.
El Salvador bought 400 bitcoins worth about $20 million ahead of the launch, Bukele said, pushing the price above $52,000 for the first time since the beginning of May. Hours later, bitcoin had weakened and traded at $47.327, down 8.84%.
Since El Salvador has been using the dollar as its official currency since 2001, businesses can accept payment in bitcoin along with the U.S. dollar. It is unclear whether businesses will be penalized for refusing to accept bitcoin.
During the run-up to the launch, the government installed ATMs that would allow bitcoins to be converted into dollars and withdrawn without commission from Chivo’s wallet.
Apple Inc., Alphabet Inc.’s Google and Huawei’s app download platforms were responsible for the initial Chivo delay, according to Bukele. ‘Release him! @Apple @Google and @Huawei’ Bukele said in a tweet, which included a red face emoji paired with an angry expression. Later, the wallet was available from Apple and Huawei.
In another tweet, Bukele said that, “Like all innovations, El Salvador’s bitcoin process has a learning curve. Not everything will be achieved in a day, or in a month.” Bukele has almost all the levers of power under his control in barely two years as president. Despite his promises to clean up corruption, the Biden administration recently placed some of his close allies on a corruption blacklist.
Top judges appointed by Bukele’s lawmakers ruled that he could serve a second term, reversing a constitutional rule that prohibited consecutive terms. Also, Analysts worry that bitcoin adoption, with its anonymous transaction records distributed over the internet, will encourage money laundering.
El Salvador’s dollar-denominated bonds are also in a precarious position because of the bitcoin law, which was approved recently by the State Council. Additionally, the ratings agency, Moody’s recently downgraded El Salvador’s creditworthiness following the bitcoin law’s approval.
The World Bank reiterated on Tuesday that it could not assist El Salvador in converting to bitcoin “given environmental and transparency concerns,” a spokesperson told Reuters.