In the U.S., Tuesday marked the return to work after the long Labor Day weekend. But in El Salvador, it was Bitcoin Day.
The Central American country celebrated the first day it officially recognized bitcoin as legal tender. It’s the first nation in the world to do so.
Starting on Tuesday, Salvadorans could use a digital wallet app on their smartphone called Chivo to shop at stores and restaurants around the country.
To help kick off Bitcoin Day, the El Salvador government gave $30 in bitcoin to everyone who signed up on the app.
It also installed 200 ATMs that can be used to exchange bitcoin for U.S. dollars.
The government estimates that adopting bitcoin will save its citizens about $400 million a year in international money transfer fees.
In a country where most residents don’t have a bank account or credit card, Bitcoin Day was a huge step toward modernization.
But it wasn’t without a few snags…
First of all, the Chivo app suffered from a variety of technical issues on its launch day.
Many people couldn’t even download it, as the app was initially unavailable on Apple, Android and Huawei smartphones.
And at one point, the app’s servers were overloaded and had to be shut down.
El Salvador President Nayib Bukele tried to reassure users from his Twitter account, but many Salvadorans were confused and frustrated with the technical problems.
Next, most residents of El Salvador have never traded cryptocurrencies before, and they’re not fond of using them as a national currency.
A recent poll shows that over 70% of Salvadorans would rather use U.S. dollars for transactions.
Bukele reminded critics that paying for things with bitcoin is optional.
“Don’t download [Chivo], and continue living your normal life. Nobody is going to take your dollars,” he said.
Finally, bitcoin’s volatility was a problem for people who spent their bitcoin on Tuesday.
The crypto’s price fell as much as 15% during intraday trading. That meant items essentially cost over 15% more than they did earlier in the day.
If bitcoin goes through another 50% crash like it did earlier this year, Salvadorans’ purchasing power would be significantly reduced.
But Bukele was upbeat throughout the volatility, telling his followers on Twitter that the government was “buying the dip.”
A Chance at a Better Future
El Salvador isn’t the only country where bitcoin’s catching on.
Crypto research firm Chainalysis ranked each country based on its crypto activity compared to the average person’s wealth.
Out of the top 20 countries, seven are in Asia, six are in Africa and four are in South America.
The 2021 Global Crypto Adoption Index Top 20
As you can see, Vietnam leads the pack by a wide margin.
A recent survey by product comparison website Finder shows that 41% of the Vietnamese population own cryptos — the highest rate in the world.
Vietnam is a relatively tech-savvy country. Over 70% of its population uses the internet, and at least 59% are active on social media.
Yet, according to data from Vietnam’s government, the average annual income there is only $2,184.
Due to a lack of opportunities, many Vietnamese citizens view trading cryptos as their best chance at a better future.
More People Are Joining the Crypto Bandwagon
El Salvador is the first country to adopt cryptos, but it won’t be the last.
Total global crypto adoption is up 881% in the last year and up over 2,300% since the second half of 2019.
With more people joining the crypto bandwagon every year, it’s only a matter of time before governments in developing nations get on board.
But that’s only one catalyst for the enormous growth ahead for the crypto markets.
In a special presentation, Ian King explains what to expect for the rest of 2021 and how to profit from cryptos’ next rally.
Assistant Managing Editor, Banyan Hill Publishing