Will Bitcoin boom or bust in El Salvador?
- Bitcoin plummeted 19% in a day as El Salvador adopted it as legal tender.
- El Salvador is the first country to give Bitcoin the same status as the US dollar.
- Protests, technical outages and volatility resulted from El Salvador’s adoption.
Protests, technology issues and a nosedive for the world’s largest cryptocurrency was not the way El Salvador President Nayib Bukele would have hoped the country’s adoption of Bitcoin as a legal tender would have gone.
Just hours after El Salvador adopted Bitcoin as its official national currency, alongside the US dollar, the world’s largest cryptocurrency plummeted more than 19% from US$52,000 to US$42,000 within hours.
The Bitcoin price dive has been attributed to a number of factors. Firstly, Bitcoin has never before been used as the national currency of a country.
The El Salvador government then gifted every El Salvadoran $30 worth of Bitcoin if they registered with their Salvadoran national ID number, in a bid to increase adoption of the new currency.
Offering such a gift didn’t account for an inundation of users hitting the sign up site, which resulted in server shutdowns. Apple and Huawei were among some of the other platforms that didn’t offer Chivo – the El Salvadoran government-backed digital wallet.
Adding to the kerfuffle, angry protesters took to the streets, expressing their fears of financial instability as a result of the crypto-adoption.
The immediate 19% plummet of Bitcoin lost El Salvador (one of Latin America’s poorest countries) $3 million, whilst also being the biggest drop in value of Bitcoin since the bull run began in July.
Despite the global popularity of Bitcoin, the latest move by El Salvador adds fuel to the fire about the increasing damage being done to the environment as a result of mining the world’s largest cryptocurrency.
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