When El Salvador announced in June that it would adopt Bitcoin as legal tender, alongside the US dollar, it was met with excitement and scepticism in equal measure. While the government said Bitcoin will promote financial inclusion and development, not many were convinced. They waited for three months to see how the proposal matured and how the central American country rolled out. More than anything, there would be wide acceptance for such a bold move that dominated the initial response. Later, all eyes were set on making sense of how the world’s largest cryptocurrency will behave when the decision came into effect on September 8.
The initial rollout was marred by technical snags. The El Salvadoran government’s wallet, Chivo, was not available on many app stores. Then the huge number of users registering on it forced the government to suspend the app briefly to add servers and increase capacity. All these hiccups had a bearing on Bitcoin’s price.
The crypto coin dropped sharply from its then peak at $52,000 (Rs 38 lakh) to $44,000 (Rs 32 lakh) within 24 hours on September 7-8, losing more than 15 percent, according to CoinMarketCap. It has since stabilised around $46,000 (Rs 32.37 lakh).
While the recent rise in the value of Bitcoin was linked to El Salvador news, the excitement appears to have given way to the reality of the disruption it may cause at least immediately.
Still, the fluctuation in Bitcoin’s price is not much compared to April-May when it had slid below $30,000 (Rs 22 lakh) in a massive crash, soon after reaching its all-time peak at $65,000 (Rs 47.81 lakh).
The new El Salvadoran law mandates that businesses accept Bitcoin as payment for goods and services, wherever applicable. Merchants who are not technologically able to accept the virtual currency have been exempted. The government has installed 200 “Bitcoin ATMs” across the country. It also bought 400 Bitcoins worth about $20 million (Rs 147 crore) and is offering $30 (Rs 2,207) worth of Bitcoin to El Salvadorans, who register on the Chivo wallet.
Many expect more countries to follow El Salvador in adopting Bitcoin after learning from its experience.