El Salvador made a big move in early September by introducing Bitcoin as legal cash. Businesses may now take payment in both the digital currency and the country’s official currency, the US dollar, due to this shift.
In preparation for the launch, El Salvador purchased 400 BTC. According to President Nayib Bukele, the acquisition of digital money will help push the current price above $52,000, the highest level since May. However, the price of Bitcoin dropped shortly after the debut, prompting the El Salvador government to claim that it had purchased an extra 150 Bitcoins.
According to Bukele, the launch will benefit Salvadorans by saving roughly $400 million (€338 million) in remittance charges each year and providing financial services to those without bank accounts.
Despite the government’s promise of $30 in digital currency to each government’s digital wallet user, citizens have expressed their dissatisfaction with the rollout. As of September 7, 2021, the country’s national digital wallet, Chivo, was unavailable on Apple, Google, or Huawei’s app download platforms, though it was eventually made available on Huawei’s platform. In addition, Salvadorans are wary of using Bitcoin due to technical issues, attributed to a fear of the digital currency’s volatility and a lack of understanding of how it works.
Before the launch, the government deployed automated teller machines (ATMs) that will dispense dollars converted from BTC to the Chivo e-wallet without commission. Surprisingly, many residents (mainly the poor) lack access to the technology required to make BTC operate in El Salvador; almost half of the population lacks access to the internet, while others have inadequate connectivity.
Honduran and Guatemalan central banks are looking into the viability of CBDCs
According to reports, the presidents of Guatemala’s and Honduras’ central banks disclosed that they were studying digital currencies intending to adopt them. Therefore, adoption could potentially be facilitated by establishing a central bank digital currency (CBDC), which would increase the likelihood of adoption.
Jose Alfredo Blanco, Vice President of Guatemala’s Central Bank, stated that they are investigating the possibility of introducing a national digital currency. He further stated that a committee was formed for this purpose and that the currency would be named “iQuetzal.”
Blanco said that the inquiry phase could take a long time to finish.
Wilfredo Cerrato, Honduras’ central bank president, spoke on the issue at a regional economic meeting. He stated,
“The Central Bank of Honduras has also recently begun, approved by the board of directors, to initiate the study….. to determine the feasibility of conducting a pilot test issuing its own digital money or a central bank digital currency.”