El Salvador’s Bitcoin debut stumbled due to technical issues

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Bitcoin update

Salvador’s Groundbreaking adoption After the government had to temporarily take its application for storing unstable digital assets offline and global prices plummeted, Bitcoin as a legal tender ran into obstacles within a few hours of its launch on Tuesday.

At dawn local time, President Nayib Bukele (Nayib Bukele) said on Twitter that the digital wallet application called “Chivo” will stop working when server capacity increases.

The app provided Salvadoran citizens with free Bitcoin for the initial $30, and it was back online a few hours later. Bukele appeared to personally oversee the testing process via Twitter. By noon, the Chivo app can be used on both Huawei and Apple mobile phones. The government also hopes to provide it through Google.

Due to the collapse of the country’s wallet system, the global price of Bitcoin fluctuated, falling 17% to $43,119, then rebounding to a drop of 10%. The US cryptocurrency exchange Coinbase encountered technical problems and delayed or cancelled some customer transactions.

The crash happened the day after El Salvador spent millions of dollars to buy 400 bitcoins. Booker said on Tuesday that the country had purchased another 150, bringing the total to 550.

Small countries in Central America became First Among the world’s plans to make Bitcoin legal tender, one plan passed Congress in a few hours and was implemented in just 90 days. Economists and the international financial community criticized this move, and Salvadorans also don’t like this move.

The rating agency Moody’s downgraded the country’s debt rating, partly because of the law, and the International Monetary Fund-currently in talks with the government on new loans- warn Such a plan could damage an economy worth 25 billion U.S. dollars.

Siobhan Morden, head of Amherst Pierpont’s Latin American fixed income department, pointed out that Bukele’s Bitcoin strategy coincided with a move to consolidate its power, which has been severely criticized by the United States.

She wrote in a report: “The official release of BTC may dominate the headlines.” “However, more important is the ruling of the Constitutional Chamber of the Supreme Court.” [last Friday] This allows consecutive re-election. “

On Tuesday, hundreds of people staged various protests in the capital San Salvador, holding placards against Bitcoin and the ruling party’s recent reforms calling for the dismissal of all judges over 60.

According to a video posted on Twitter, a group of young protesters chanted outside a Chivo ATM: “They are there. Those are the ones who used Bitcoin to steal.”

According to local media reports, several opposition lawmakers appeared before the legislature wearing black anti-bitcoin T-shirts.

Cryptocurrency fans around the world are full of praise for El Salvador’s pioneering actions on social media, and some have launched a campaign to try to persuade people to buy $30 in Bitcoin to show their support.

Booker said he decided to help bring investment to the country and improve access to financial services. But on Tuesday morning, he said that his team is still working to increase the server’s ability to scan images.

“This is a relatively simple problem, but you can’t fix it while the system is connected,” He said on Twitter“Be patient.”

According to the law, all businesses in the country must accept Bitcoin as a payment method for goods and services, but citizens can still choose to use the U.S. dollar, which has been the national currency since 2001.

Luis Membreño, an economic consultant who advises local and international companies in El Salvador, said the problems with the application are predictable.

“This is a disaster,” he told the Financial Times, adding that if people can’t convert Bitcoin into U.S. dollars, then the current and future problems of the app may bring people losses. “This means that people have lost faith in the system.”

The plan is supported by a US$150 million government fund, and many economists believe that the fund is not sufficient to deal with the risk of allowing taxes to be paid in Bitcoin while liabilities are mainly paid in US dollars.

Proponents of cryptocurrency are not deterred, they say that the bigger story is that the country has taken steps that will ultimately help reduce the cost of remittances.

Antoni Trenchev, co-founder of digital asset expert Nexo, said: “It’s very important to take a step back and recognize the vastness of today.” , The company, and the wall of abuse and rejection currently adopted by a country.”

However, in practice, the use of Bitcoin has so far been restricted by the application’s problems, said Leonor Selva, executive director of the commercial lobby group ANEP. “On the economic level, it will be ignored… This is a failure.”

Additional report by Philip Stafford in London

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