Three months after El Salvador adopted Bitcoin as legal currency

Andy VilchezFollow

Dec 9, 20214 min de lectura

Time flies and last Tuesday, December 7, El Salvador reached its three months since Bitcoin is used as a legal currency. This announcement gave much to talk about at the time, however, the project was carried out and Bitcoin began to be used as a means of payment in this country.

During these last three months a variety of things have happened. In the first place, we have that this measure has not gained the popularity that was expected among Salvadorans, in addition to the gains that the government has made in this way.

To all this must be added other problems such as a lack of transparency in the handling of funds. In the same way, there were several problems related to identity theft to be able to collect the bonds that the government gave, to encourage the use of bitcoin and its wallet.

Salvadorans are not encouraged to use bitcoin

The main obstacle that the Salvadoran government has faced with the use of Bitcoin is that citizens are not encouraged to use Bitcoin in their day-to-day life. According to the survey conducted by the Centro de Estudios Ciudadanos (CEC), 91.4% of Salvadorans prefer to use the dollar over Bitcoin (4.5%).

This is something that makes this coin of little use, since it is used by very few people. And it is that people's fear is understandable, since it is a Russian roulette, if Bitcoin rises, their assets also, but if it falls, they will have less money.

This makes people prefer to choose a stable currency with which their assets are not affected.

Although this may be a good initiative, as long as people do not support it, it is not going to take off.

The bitcoin city, Nayib Bukele's biggest project

Another thing that should be noted is that on November 21, the president of El Salvador, Nayib Bukele spoke about a great project called "Bitcoin City".

This city will be located in the Gulf of Fonseca and one of the main advantages it has is that the activities in it will not pay taxes (except VAT).

This can make it attractive to many investors, yes, as you can imagine, transactions must be made in bitcoins.

This is a great bet by the government to be able to get bitcoin to start to become popular thanks to tax incentives. The government is going to issue bitcoin bonds totaling $1 billion. This will be used 50% for the purchase of bitcoins and the other 50% for the infrastructure of this new city.

This measure has drawn quite a lot of criticism from people and economists, not only within El Salvador but throughout the world. And it is that they all affirm that this special legislation that will apply in this bitcoin city can be very dangerous. This is mainly because in the absence of taxes, the expense will have to come from elsewhere.

A reality or an illusion?

Experts claim that this bitcoin city may just be an illusion of the president and potential followers. At the moment they do not see viable that this project can be carried out, at least in the terms set forth by the president.

And it is that the bonds that are going to launch to get the funds for their creation, have a very low interest rate (6.5). Investors are unlikely to be attracted to these bonds at this low interest rate. However, we will have to wait to find out if this really becomes viable or not.