Life with Bitcoin in El Salvador through the eyes of a local by DailyCoin
Life with Bitcoin in El Salvador through the eyes of a local
Some Salvadorans have responded to their country’s adoption of legal tender by setting Bitcoin ATMs on fire and chanting “No to Bitcoin” and “Respect the Constitution” in the streets. Some worried about the instability and uncertainty of the new digital currency surrounding crypto, while others saw Bitcoin as a path to financial freedom.
This article shares the opinion of Diego Cerritos, a 25-year-old marketer from San Salvador, the capital, who has observed changes and people’s reactions to Bitcoin in his home country. In an exclusive interview with DailyCoin, Diego explained how Bitcoin has been adopted and used in El Salvador in the last few months since its adoption.
Using Bitcoin for Daily Spending
The Chivo app is the most used wallet and probably the only one that works daily in El Salvador, as it has no fees and transactions are instant (although it does not use a blockchain).
There are Chivo ATMs all over the country, so it’s quite easy to convert USD to Bitcoin and vice versa. Many businesses also use Chivo POS (PIN Pad), which works the same as a smartphone with a wallet, and is easy for businesses to use.
“I did some shopping with Bitcoin, although it is always more convenient to pay with cash. Store employees are still learning to use a wallet or point of sale system. The overall payment process with Bitcoin is faster than with a credit card, but still slower than with cash, ”added Diego.
On the other hand, the costs are an important variable to include, even for the lightning network. An $ 8 purchase from a supermarket can cost $ 10 due to fees. Additionally, higher fees mean faster transaction, which is why the Chivo app (official wallet that uses USD and Bitcoin) has become an essential tool for using Bitcoin as a currency.
As long as users transact between Chivo apps, they can avoid charges and payments are instant. It doesn’t matter whether they are using USD or Bitcoin, it means that the Chivo app is not using the blockchain at all. The problems start to surface when users want to use the Chivo app with external wallets (Muun, Coinomi, etc.), either through the Lightning network or through Layer 1.
Additionally, if users have ever failed a transaction from Chivo to an external wallet, they should call Chivo customer support and wait for a refund, as the money they send never enters the blockchain network, a explained Diego.
Lack of knowledge is a problem
Most people did not know about cryptocurrencies before and it was difficult to convert Bitcoin to El Salvador currency (USD). Now with the Bitcoin law, cryptocurrency is more accessible; However, it will take time for most people to understand crypto and use it instead of owning it.
“I think there are opportunities for crypto to flourish in El Salvador, although that will require an appropriate fundamental plan, not just a random way of spending money,” Diego said.
There are no official (government) plans to educate people about crypto other than teaching them how to use the Chivo wallet. There are a few small initiatives from people here and there, but the easiest way to learn is probably to search the internet on your own, watch videos, and slowly figure out how it all works.
“Are people interested in learning more about crypto? Not really. From my perspective, most people will only learn to use the Chivo app and that’s it.
No one gets paid in Bitcoin
At present, it is illegal to pay employees or to be paid in crypto (President Nayib Bukele himself has said this), and companies that pay in Bitcoin will be penalized. This was one of the main concerns of the population, as the volatility of Bitcoin prices could hurt the financial situation of many families. Many live on a tight budget and can’t wait for Bitcoin to rise if it is low.
However, from a legal standpoint, the Bitcoin law actually allows companies to pay their employees with Bitcoin. Article 120 of El Salvador’s Labor Law stipulates that “wages must be paid in legal tender”. The Bitcoin Law reads: “This law is intended to regulate Bitcoin as legal tender, with no payment restrictions, no limits on any transaction, and for any security that people or companies should use.” “
“If the salary is to be paid in legal tender, which is the case in both USD and Bitcoin, why would paying salaries in Bitcoin be illegal? This causes unnecessary confusion. These are probably the main reasons why a protest starts. The government needs to step in to fill in the gaps and explain the Bitcoin law because it is contradictory and does not provide guidance on many day-to-day decisions, ”added Diego.
What is the future?
As Diego observed, most citizens don’t know much about crypto, and they are indifferent or afraid of the new currency. However, due to the popularity of Bukele, people might give Bitcoin a try. It is also important to clarify that Salvadorans are very suspicious of the concept of easy money; the idea that your money grows over time without doing anything seems unreal to many people.
On top of that, since there is no real benefit to using Bitcoin instead of USD on a daily basis, it may take some time for people to fully embrace Bitcoin as a currency. The government is encouraging people to use Chivo wallets by offering discounts on gasoline, but there is still a long way to go.
However, the young Salvadoran is positive about the country’s future with Bitcoin:
“Cryptocurrency will help in the long run; the possibility of not relying on banks for transactions or saving money is great. For a small country with a small economy like El Salvador, financial entities may offer more competitive services or fees to stand out. Additionally, having a decentralized currency like Bitcoin could empower entrepreneurs and local businesses to grow without much hassle.
Still, it will all depend on how much knowledge / education people have about crypto and finance, but it’s interesting how far we can grow as a country in the future.
On the reverse
- More education on cryptocurrency and blockchain is needed for people to fully understand and use Bitcoin on a daily basis.
- El Salvador’s future regarding its journey with Bitcoin is still unclear, but improvements can help the local economy thrive.
Why should you care?
Other countries could possibly follow El Salvador’s lead and adopt crypto as legal tender.
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