Bitcoin: El Salvador divided over legal tender law
- Published
Surveys suggest most Salvadorians do not want Bitcoin and do not understand how crypto-currencies work
There is growing scepticism in El Salvador as the country prepares to be the first in the world to recognise Bitcoin as legal tender on 7 September.
The government has presented the measure as a way to boost economic development and jobs.
Polls suggest Salvadorians are not prepared for the move, and the World Bank has warned against its adoption.
Analysts say it is an "attention-seeking move" from an "authoritative regime".
Next week's landmark day follows a vote by lawmakers in June to legalise the crypto-currency.
Under the country's Bitcoin Law, businesses will be obliged to accept it or the US dollar, the country's other official currency, as payment.
More than 200 new cash machines are being installed across El Salvador to enable dollars to be converted into Bitcoin.
El Salvador's government is offering $30 (£22) in free bitcoins to encourage citizens to use its national wallet, which is accessed via an online app.
El Salvador been divided by the move since it was announced.
Protests have been held in the country's capital
Recent protests in the capital, San Salvador, have demonstrated a lack of confidence among citizens, many of whom are still unfamiliar with crypto-currency.
A survey by the Central American University (UCA) found that only 4.8% of the 1,281 asked understood what Bitcoin was and how it was used.
More than 68% of those questioned said they disagreed with using crypto-currency as a legal tender.
More than two million Salvadorian workers in other countries send money to their families back home. Remittances make up around 20% of the country's GDP.
Those favouring the move have suggested that using Bitcoin could make sending money home cheaper.
However, others argue otherwise.
"A recent academic paper showed the exchange costs may actually end up being even higher," warned crypto-analyst Glen Goodman.
"It is also being imposed on small businesses against their wishes. According to a Chamber of Commerce survey, 82.5% of respondents do not want to receive remittances in Bitcoin, mainly because its price is so volatile and unpredictable.
"If it is not broken, it is fair to ask President [Nayib] Bukele why he is trying to fix it. I have not heard a convincing answer so far," added Mr Goodman.
Neil Wilson, chief market analyst at Markets.com, says the country's poorest are likely to be the ones who benefit least from the move.
"El Salvador is tiny, in terms of economy. This looks like nothing more than an attention-seeking move by the autocratic regime," he said.
"Bitcoin is intrinsically bad as a means of payment since it is quite costly for small transactions."
Bitcoin, a virtual asset with no direct connection to the real economy, has experienced large fluctuations in value over the years.
It fell sharply in May after a crackdown in China and a decision by Elon Musk's Tesla not to accept it as payment any more.
However, it has since recovered, rising above $50,000 (£36,000) for the first time in three months in late August.
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