Angry protests and confusion amongst citizens, technological glitches and a drop in market value plagued El Salvador yesterday, as the country made history by becoming the first in the world to adopt Bitcoin as a legal tender.
As the change took hold, Bitcoin crashed to its lowest price in almost a month, plummeting from $52,000 (£37,730) to below $43,000 at one point.
At 7:30 am BST on Tuesday, it had crawled slightly higher to $46,385.
One opposition politician claimed El Salvador, which is one of Latin America’s poorest countries, lost up to $3m due to the fall in value.
As of yesterday, Bitcoin is accepted by businesses across the country alongside the US dollar. Every citizen received $30 worth of bitcoin pre-loaded onto a government sanctioned e-wallet called Chivo.
It’s part of young president Nayib Bukele’s economic experiment, proposed as a way to help Salvadorans save on commissions for remittances, mostly sent from the United States.
El Salvador’s economy is highly dependent on money that its citizens who are based abroad send home, and last year the country’s economy received a $6bn boost from remittance payments, but lost out on $400m paid in commission fees.
Bukele believes the country could save this $400m a year on funds sent from abroad through using Chivo.
But things didn’t go exactly to plan on the scheme’s first day.
Key platforms including Apple and Huawei didn’t offer Chivo, and servers were so weighed down with user registrations that they came offline.
Things improved further into the day, when Chivo reportedly appeared on more platforms and big brands such as McDonald’s and Starbucks began accepting the tender.
Protests and confusion
Although the use of Bitcoin in the country is optional under Bukele’s new scheme, its adoption sparked outrage and protests amongst citizens who felt left in the dark when it comes to how it will actually benefit them and the practicalities of how it will work.
More than 1000 citizens gathered to protest outside the country’s supreme court, setting off fireworks and burning tyres.
“We don’t know the currency. We don’t know where it comes from. We don’t know if it’s going to bring us profit or loss. We don’t know anything,” Claudia Molina, a 42-year-old souvenir seller told Reuters.
“They haven’t given us training. They haven’t told us what we’re going to use or how to make the change,” she added.
Opposition politician Johnny Wright Sol told the BBC that the new currency plans were rushed through government and weren’t appropriate on a national scale.
“The Bitcoin law was approved in parliament with hardly any debate. It took only about five hours to go through,” he said.
“We’re not cryptocurrency or Bitcoin haters, but we don’t believe that it should be compulsory that businesses should be obligated to accept Bitcoin in payment.
“The state is backing these payments and assuming the risk but at the end of the day us taxpayers are all the state.”