In an interview this week, the CEO of payments firm Bitcoin Strike said that the trial of bitcoin as a legal currency in El Salvador did not hurt his company in any way, noting that its only involvement in the project was advising President Najib Bukele.
He also said that he believed he had been successful, in an interview with CoinDesk on Thursday (September 29), asking if the Central American country should copy what the plunging British pound is doing.
Comparing the government’s year-long experience with Bitcoin joining legal tender with dollars to a home assignment, Strike’s Jack Mallers asked when it was due, noting that Bitcoin’s September 7 legal anniversary is not the end of the experiment.
“You’re talking about a country that has historically been crushed by inflation, and has been crushed by banks like the Federal Reserve,” he added.
So far, however, the results have been dismal, given the amount the government has spent trying to get people to use it – an estimated $375 million, excluding paper losses on bitcoin holdings – with so little success that most merchants in San Salvador’s central business district have stopped. About their acceptance, even though they are legally obligated to do so.
Read more: One year later, Bitcoin’s experiment is bombarded
There are remittances, which should be the place to send money back home in El Salvador, as the country’s Chivo digital system makes it both free and in real time. Despite this, only 2% of remittances are sent via Chivo, and not all of that is bitcoin, which can be used to send dollars as well.
Moreover, the broader financial damage includes alienating the International Monetary Fund (IMF), which refused to move forward with a loan that would help it avoid a default at the beginning of 2023, and whose sovereign bonds have collapsed to the point where they are. The current value of 40 cents in the dollar has risen nearly 50% since July – but is down from $0.85 last September.
Bitcoin payments are mostly installed in countries where the local currency is experiencing severe inflation or hyperinflation – Argentina, which is 80%, for example, has this effect – but first of all, the inflation rate in El Salvador is less than 8%, Secondly, it does not have a national currency for hyperinflation. The only other legal currency is the dollar.
However, when addressing the United Nations General Assembly last week, Bukele began by saying, “I bring you greetings from the land of waves, volcanoes, coffee, peace, bitcoin, and freedom,” and then spent a good portion of the Speech to freedom, and to complain that rich and powerful nations are bullying their smaller neighbors — some stinging thumps that were probably euphemisms for the IMF.
He said, “Freedom is something we still fight for in our country because while we are free and sovereign and independent on paper, we will not be until the powerful understand that we want to be friends with them”, to me Kryptonotesias. “Our doors are open to building the best relationships… The basic requirement is that the powerful respect our freedom.”
See also: Bringing Bitcoin firmly to payments, partners strike with NCR, Shopify, Blackhawk
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