Without a pretty sharp jump, Bitcoin will end the year below the $ 51,000 level at which El Salvador bought its first 200 BTC, a dire note for the turn of the largest cryptocurrency as the official national currency.
But El Salvador’s President Nayib Bukele was not very lucky with his experiment. The initial announcement that the country would make Bitcoin the second legal tender in El Salvador alongside the US dollar met with consternation from economists, growing concerns from international financial organizations – especially the International Monetary Fund – and protests from citizens who supported the idea were dissatisfied with such a volatile currency.
However, President Bukele has not wavered, bought more bitcoins during his first slump, and touted the program in the face of growing dissatisfaction. Much of this dissatisfaction is due to a lack of transparency in the program, which, according to ElSalvador.com, was approved with almost no discussion of the risks of implementing a crypto asset with high volatility as legal tender. A poll from late November found that only 4.9% of the population preferred the cryptocurrency
It is noteworthy that the law, which added not just a new currency but a new type of currency as legal tender, was only 16 articles long and widely “described as too short and failed to clarify many of the issues that Salvadorans to date continue”. I don’t understand, ”said the new point of sale on December 23rd.
Issues include the $ 300 million price tag which includes approval to purchase 1,370 BTC, depositing $ 30 BTC into each citizen’s Chivo wallet – created for the program – and a $ 150 million trust with no public details about how or by whom it is run, ElSalvador.com said.
On November 20, President Bukele announced plans to build a geothermally powered “Bitcoin City” with funds raised from a Bitcoin-backed bond worth $ 1 billion.
See also: El Salvador plans to build a tax-free Bitcoin City
And on December 23, he declared in a tweet that the world was watching what international organizations in El Salvador called “The #Bitcoin Experiment” show “how mass adoption is changing a country’s economy,” Diario said El Salvador.
Continue reading: Bitcoin and stablecoins will change the economy of El Salvador, says the CEO of the Stellar Foundation
“If it’s for a good thing, it’s game over for FIAT,” said President Bukele. “El Salvador is the spark that ignites the real revolution.”
Holes in Chivo purses
The biggest problem the experiment faces is the Chivo Wallet, a purpose-built digital wallet that does not contain any open source code that can be examined for loopholes. It does appear to have loopholes, however, as the number of complaints from citizens about the disappearance of funds from their wallets continues to grow, ElSalvadorgram noted.
And it’s not just the unspent $ 30 sign-up bonuses that Chivo Wallet users are reporting stolen, the news agency said. It quoted one user who complained that $ 16,000 disappeared while another said $ 3,921 disappeared in 13 unauthorized transactions.
Even more frustrating is the lack of any action taken by Chivo’s technical support staff.
See more: Chivo Wallet in El Salvador plagued by the threat of sanctions, identity theft and data protection issues
This brought Steve Hanke, professor of applied economics at Johns Hopkins University and currency expert who is director of the Troubled Currencies Project at the Cato Institute, a libertarian think tank, an energetic I-already-already.
In a December 28 tweet, Hanke pointed to persistent reports that the Chivo wallet is “plagued with malfunction” amid accounts of vanishing funds.
“As I said from the start, the Chivo wallets would make ELSL the number 1 global target for hackers.”
That may be a bit thick given the $ 30 targets, but Hanke said earlier this year that, according to ElSalvador.com, it would not be a bad luck to make Bitcoin legal tender alongside the US dollar.
The greatest threat, he said, would come from “dark forces” attacking El Salvador not because of its bitcoins, but because of the ability to exchange bitcoins for dollars. “They will come like vacuum cleaners to take all the dollars away from El Salvador in a short time,” he added.
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