Bitcoin’s proposed introduction by El Salvador would not end dollarization in the Central American economy, senior government officials said, addressing concerns expressed by citizens confused about the plan.
“The [U.S.] The dollar will continue to be legal tender in El Salvador. Operations can be carried out with Bitcoin – obviously related to its dollar value, “El Salvador’s Minister of Commerce and Investment Miguel Kattán said in a statement in local newspaper El Mundo on Monday.
Kattan gave the most thorough insight to date into President Nayib Bukele’s plan to grant Bitcoin legal tender status, saying the pending bill would create an opt-in Bitcoin economy in which the dollar, El Salvador’s official Fiat since 2001, the supremacy remains.
Kattán stated during a central bank press conference, the first to address Bukele’s surprise Saturday announcement televised at the 2021 Bitcoin conference in Miami, that goods in El Salvador will be denominated in dollars. For example, a tomato that costs 20 cents will still cost 20 cents, even from sellers who accept Bitcoin.
He tried to reassure the Salvadorans who feared a complete switch to a Bitcoin standard. Radical social media predictions of an economy where goods are priced in satoshis will never come true, he said.
The possibility of such a future has caused confusion on social media, according to local journalist José A. Barrera.
“As of Saturday, very few people knew about cryptocurrencies” in El Salvador, he said in Spanish over a series of Twitter direct messages with CoinDesk. “Let’s say it’s not a popular topic.” But it began to consume Salvadoran online discourse almost immediately.
“In social networks and discussions, people associate or think they are [would] Must have bitcoins’ as soon as the bill becomes law.
The discrepancy between the price of Bitcoin (over $ 30,000) and their country’s minimum wage below $ 300 a month only added to the confusion, he said. (Bitcoin is divisible to the eighth decimal place, which makes it possible to buy a fraction of a coin, but this is not always obvious to someone unfamiliar with the cryptocurrency.)
Because of this, Barrera said the government’s first official word on Bukele’s surprise announcement “no coincidence” included a promise “that Bitcoin will not replace the dollar.”
Nayib Bukele, now President of El Salvador, was shown when he was Mayor of San Salvador in 2016. (Creative Commons)
“The law says at the end of the day that you can pay with Bitcoin – if the person charging accepts Bitcoin and if the payer wants to pay – with Bitcoin,” said Kattán during the press conference.
Even so, Kattán said the bill would recognize Bitcoin as legal tender in El Salvador. The bill would also include anti-money laundering safeguards, he said.
Kattán said Bitcoin was a growth opportunity for El Salvador. He pointed to the success of a community called “Bitcoin Beach,” where hotels, shops, restaurants and even the water company accept Bitcoin over the inexpensive Lightning network.
“It’s no different from what we have today,” said Kattan. For consumers and retailers, “their relationship will always be with the dollar”.
Barrera said Bitcoin is “likely” viable in El Salvador as many residents are already connected to the digital economy.
“But we have to wait and see what the terms of the bill will be, which will certainly be passed as proposed by Nayib Bukele,” he said.