FEATURE-El Salvador’s bitcoin ‘experiment’ leaves digital poor on the sidelines
* Old and poor people struggle to embrace bitcoin * Many are confused about the switch to digital currency
* President amends bills to stimulate economy By Anna-Catherine Brigida and Anastasia Moloney
Bertila Garcia has set up her snack stand in the same corner of the Salvadoran capital for four decades – never accepting anything other than cash as a means of payment. Even though her country is making history by adopting bitcoin, she has no plans to change. This month, the Central American country became the first in the world to adopt cryptocurrency as legal tender, but many ordinary Salvadorans, like Garcia, 65, are struggling to understand how this step could affect their families. means of subsistence.
“I don’t understand it. I don’t understand it at all,” Garcia told the Thomson Reuters Foundation, adding that none of his clients had asked to pay in bitcoin since the controversial new law took effect. September 7. Even though she wanted to use cryptocurrency, Garcia doesn’t own a smartphone and said she has no other way to download the government-launched “Chivo” app and bitcoin wallet.
So far, about a quarter of El Salvador’s 6.4 million people use Chivo, the country’s tech-savvy young president Nayib Bukele said in a September 20 tweet. Bukele, 40, says bitcoin will help Salvadorans save some $ 400 million in annual commissions on remittances, but experts cite concerns about data privacy and price volatility, warning older people in particular could be left behind.
As part of the reform, businesses are to accept bitcoin payments alongside the US dollar, which has been El Salvador’s official currency since 2001. On the Pacific coast, some tourists and young restaurateurs and hoteliers have been using digital currency for as long as possible. at three years. Shops in the surf town of El Zonte – known as Bitcoin Beach – display signs that say “We accept bitcoin.”
Elsewhere, long queues can be seen outside government-installed bitcoin ATMs where people can exchange their cryptocurrency for dollars, although some may be waiting to receive a bitcoin bonus of $ 30. $ for all those who register for Chivo. “LABORATORY EXPERIENCE”
Bukele announced the adoption of bitcoin as a way to boost economic development by making El Salvador less dependent on the U.S. dollar and improving access to financial services for people who do not have a bank account. But securing the use of the Chivo wallet could prove difficult for older people and those living in rural areas, where there are few ATMs, limited internet access and a strong cash-in-hand culture.
About half of Salvadorans do not have access to the internet, according to the World Bank. The country’s poorest people and those – like Garcia – who don’t own smartphones or lack digital literacy skills might also find it difficult to make the leap, cryptocurrency experts said.
“Bitcoin is not an easy technology to adopt … especially for the elderly who want to receive remittances. It will face many obstacles in getting people to adopt it,” said Jean-Paul Lam , Associate Professor at the Canadian University of Waterloo. . The deployment of bitcoin in El Salvador is a “little lab experiment that other countries are watching,” said Lam, who is also a research advisor for Goodlabs Studio, a software company.
The potential savings of millions of dollars in commissions for remittances sent by Salvadoran migrants was another pillar of Bukele’s pro-bitcoin campaign. Remittances from abroad – mostly from the United States – accounted for more than 25% of the country’s gross domestic product (GDP) last year, according to the World Bank.
In northeast Morazan province, Israel Marquez, 53, said he receives $ 100 from his brother and a friend living in the United States several times a year, but is reluctant to test bitcoin. “Some people say they’re just going to download the Chivo app to spend the $ 30 and then turn it off. But I didn’t even want to do it,” he said, originally from the predominantly agricultural province.
Suspicions about bitcoin are rife in El Salvador, according to a poll conducted in August by the country’s University of Central America (UCA). Of the 1,281 people surveyed, nine in 10 said they did not have a clear understanding of digital currency, while eight in 10 said they had little or no confidence in its use.
During anti-government street protests on September 15, some protesters carried banners saying “No to Bitcoin” and a bitcoin machine was set on fire. ‘IT’S CONFUSING’
Marquez, a small coffee producer, cited bitcoin’s volatility as one of his biggest concerns. “I don’t understand how a currency raises so much price… it’s confusing,” he said.
On September 7, the day bitcoin became legal tender, its value fell 18%, said George Monaghan, an analyst at GlobalData, a London-based data and analytics company. “It’s stressful and hinders personal financial planning,” he said.
“Salvadorians are probably not familiar enough or comfortable with online technology to trust cryptocurrencies,” he added. But even tech-savvy Salvadorans have reason to question bitcoin adoption “virtually overnight,” said Julia Yansura of Global Financial Integrity, a US-based anti-graft watchdog group.
She said the rapid adoption meant the government had little time to forge a regulatory framework and protect the personal data users pass on to create their Chivo wallets. “How will this information be stored, who will have access to it and what can it be used for?” Said Yansura, the group’s program manager for Latin America and the Caribbean.
Ultimately, the extent to which Salvadorans embrace bitcoin in their day-to-day lives depends on whether cryptocurrency markets become less volatile, Monaghan said, adding that “the government can’t do much – thing to reduce the volatility of bitcoin “. In downtown San Salvador, Pedrona de Saldana, 65, who sells sweets and cosmetics at a roadside stall, has vowed to stick with cash. Like Garcia, she doesn’t have a smartphone.
“I’m not going to use it even if I had another type of phone,” she said, accepting two quarters from a customer buying gum. “I can’t use another currency that I don’t know.”
(This story was not edited by Devdiscourse staff and is auto-generated from a syndicated feed.)