As bitcoin (BTC) today becomes legal tender in El Salvador, crypto community members, economists and industry insiders are divided in their views on how the new law will impact real-world adoption of the cryptocurrency in the country.
After George Selgin, a fellow at The University of Chicago, started discussing the potential for bitcoin in El Salvador.Cato InstituteAuthor of many books about money and banking and a think tank, he shared his doubts about the topic.
Selgin also attacked the notion that almost everyone in El Salvador will get USD 30 from the government, which the government claims will be distributed to all citizens who download the government’s software.ChivoYour wallet.
Selgin stated that the actual number of people who will be benefited is less than half the population due to low internet penetration rates and demographics.
Community members quickly defended the government-initiated drop with popular bitcoiner Chief Strategy Officer atHuman Rights FoundationAlex Gladstein claims that more than half of El Salvadorans use the internet.
“According to January 2021 data, 66.1% of Salvadorans use social media, and there are 1.47 cellphones for every person in the country,” Gladstein wrote.
Selgin, a historian and monetary economist, took aim at the fact the Chivo mobile wallet was actually a custodial one where the El Salvadoran government holds the custodianship, which is contrary to bitcoin’s philosophy.
“To me, a custodial cryptocurrency exchange run by the gov’t of El Salvador sounds like a recipe for trouble,” the economist said.
While Selgin is still skeptical, many insiders in the crypto payments industry were more positive about bitcoin’s prospects for the country.
Petr Kozyakov is the co-founder and CEO at crypto payments company.MercuryoEl Salvador will benefit immensely from increased bitcoin use, especially because the cryptocurrency can eliminate “the drudgery associated to middlemen.”
“People will soon become familiar with the new legal currency and the ease of use and convenience it offers, as compared to transactions in dollars. He said that people will continue to use the digital currency because they have an alternative for making purchases.
Sebastian Markowsky is Chief Strategy Officer for the US-based Bitcoin ATM provider.CoinsourceIn a comment, he said that while the initial government-sponsored bitcoin airdrop was too small to have an impact on the price of bitcoin directly, the “marketing and awareness effect” of it may encourage further adoption.
Markowsky stated that while this was a small step in Bitcoin’s direction, it is a major step for the industry. He also said that other countries are “actively considering similar scenarios” and that more news could soon be released that will push the bitcoin price higher.
However, according to Lucia della Ventura, PhD researcher on Decentralized AI atTrinity College DublinLegal & Compliance Manager at treasury specialistLedgermaticThere are still questions about whether the infrastructure technology is in place to allow citizens and businesses to accept Bitcoin.
“This bill is an enormous technology and internet upgrade, which may not have been considered before. The researcher said that to understand whether the Government of El Salvador made the right decision, we must wait to see if the adopted regulatory system will be effective enough for economic growth to take place.
BTC trades at USD 49.958 at 14:48 UTC. It is currently down by 3% per day and its weekly gains are less than 6%.