When El Salvador makes bitcoin a legal currency on September 7, it will become the first nation in the world to do so.
Bitcoin is decentralized, digital money that can be sent from user to user on the bitcoin network. Its value is not supported by any country’s central bank. These forms of money are called cryptocurrency.
But in the “Excuartel” market of El Salvador’s capital, sellers of goods are angry that officials have not come to explain how it will work.
The feeling of unease extends beyond San Salvador’s “Excuartel” market into the Central American country of 6.4 million people.
“We don’t know the currency. We don’t know where it comes from. We don’t know if it’s going to bring us profit or loss,” said Claudia Molina, a 42-year-old seller of T-shirts and souvenirs.
“They haven’t given us training. They haven’t told us what we’re going to use or how to make the change,” she added.
The government of President Nayib Bukele has placed one of 200 banking machines at the “Excuartel” market. They are supposed to permit bitcoins to be withdrawn or changed into U.S. dollars without paying extra costs.
Reuters news agency spoke to some traders and shoppers in the market. They said no official has explained how bitcoin works, so most say they will not use it, at least to begin with.
In July, three out of four Salvadorans had worries about the bitcoin plan, public opinion research showed.
Recently, about 300 protesters marched on El Salvador’s Congress to demand that the new bitcoin law be stopped.
“Bukele, understand – in El Salvador we don’t want bitcoin,” said a sign carried by one protestor.
Another protestor, 29-year-old student Roxy Hernández, said most Salvadorans do not want to use bitcoin and do not understand the law.
The law states that sellers must accept bitcoin payments although Bukele has said it is not required for sellers or buyers of goods. “The bitcoin law is something arbitrary by the government,” said Roxy.
Bukele has defended the law. He said that use of the digital currency will not be required in the country. He also said that bitcoin will permit Salvadorans who live in other countries to send money to their families without paying extra costs.
“Once it’s in effect, people will see the benefits,” Bukele wrote on his twitter account last week.
Critics of Bukele’s plan say that using bitcoin is risky for two reasons. They say the cryptocurrency’s value changes every day. They also worry that it could be used by corrupt officials to move money illegally.
“(The) bitcoin law promises many surprises,” said Steve Hanke, an economist at Johns Hopkins University.
Hanke said it was “inconceivable” that the bitcoin plan could escape guidelines set out by the Financial Action Task Force (FATF). It is an inter-governmental organization that fights the illegal movement of money by corrupt officials.
Since El Salvador started using the U.S. dollar as its currency in 2001, inflation has been just two percent, one of the lowest in Latin America. Higher inflation, critics argue, could come from the use of a cryptocurrency because its value changes often and by large amounts.
“I prefer the dollar, because we already know it and know it well, there’s no problem. But as we don’t know (bitcoin), we don’t know how it will work,” said Jose Guardado, a farmer in an area north of San Salvador.
The World Bank and the International Monetary Fund have pointed to environmental and transparency worries over the use of bitcoin. After the bitcoin law passed, credit rating agency Moody’s lowered El Salvador’s credit rating.
Hanke believes that Bukele’s ideas will end with economic problems.
“For the United States, this would mean yet another wave of migrants from an unstable Central American failed state,” he said.
I’m Jonathan Evans.
The Reuters News Agency reported this story. Susan Shand adapted it for Learning English. Mario Ritter, Jr. was the editor.
Words in This Story
currency –n. the money that a country uses : a specific kind of money
digital –adj. using computer technology; created through electronic devices, not physically real
cryptocurrency –n. a kind of money that is exchanged only through computers and that is not supported by the government of any country
souvenir –n. something that is kept as a reminder of a place you have visited or an event you have been to
arbitrary –adj. not planned or chosen for a particular reason
benefits – n. a good or helpful result or effect
inconceivable –adj. impossible to imagine or believe
transparency –n. the quality that makes something obvious or easy to understand
unstable –adj. likely to change
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