- Bitcoin has unleashed a wave of speculation in El Salvador since its adoption as legal tender last month
- Beyond speculation, if Bitcoin’s use as legal tender in El Salvador provides tangible benefits for the impoverished Central American economy, it may embolden other countries, especially those that rely heavily on remittances, to adopt the cryptocurrency as well
What’s a bit of cryptocurrency if you can’t bet with it?
While the rollout of Bitcoin as legal tender in El Salvador was a shambles, with the government’s Chivo app crashing within hours upon launch, El Salvadorans are now gaining a taste of the potential of the cryptocurrency – as a tool for speculation.
Since its adoption as legal tender last month, drivers, waitresses and business owners are day-trading Bitcoin on their smartphones, buying the dips and selling on rallies with Chivo, that comes pre-loaded with about US$30 worth of Bitcoin.
The goal of Chivo was to facilitate Bitcoin transactions with local merchants, but because users can top up balances and switch easily between dollars and tiny, fractional amounts of the cryptocurrency, it’s a perfect tool for speculation.
And while Bitcoin use was initially met with resistance from El Salvadorans, in the capital San Salvador, large chains like Starbucks (+2.37%), McDonald’s (+0.75%) and supermarkets are accepting the cryptocurrency for purchases.
Bitcoin is also now accepted at some smaller businesses in El Salvador’s biggest city as well, with merchants using the cryptocurrency to boost profits from the sale of products, by accepting Bitcoin when its price drops, then converting it back to dollars as it rises.
Beyond speculation, if Bitcoin’s use as legal tender in El Salvador provides tangible benefits for the impoverished Central American economy, it may embolden other countries, especially those that rely heavily on remittances for income, to adopt the cryptocurrency as well.
Remittances account for over 20% of El Salvador’s GDP.