"A part of Salvadorans do not see what Bitcoin will change for them"
A woman in a shop accepting Bitcoins in the city of El Zonte in El Salvador, September 4, 2021. © MARVIN RECINOS / AFP
Text by: Aabla Jounaïdi Follow
5 mins
As of Tuesday, businesses and individuals in El Salvador will be legally required to accept bitcoin alongside the dollar as legal tender, much to the chagrin of a section of the population, which fears it will suffer from the instability of the cryptocurrency.
Three questions to economist Nathalie Janson, specialist in the subject at Neoma Business School, for whom this full-scale deployment of bitcoin will be interesting to observe.
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: Will the Salvadoran government succeed in expanding the use of bitcoin
?
Nathalie Janson:
That's the big question. Bitcoin (BTC) is generally little used as a means of payment, although it was originally conceived as a cryptocurrency by its designers. We have here a life-size experience where a country will adopt bitcoin as legal tender. It just means that if a resident of this country wants to settle a merchant with bitcoin, he has the technical right to do so.
The distinction between legal tender and money is that there is an obligation on the part of whoever is going to receive the bitcoin payment to accept it.
Now, given the situation, and Salvadorans' familiarity with bitcoin, it looks like the cryptocurrency is not going to be used much.
A study [from Francisco Gavida University, Editor's note] shows that a small proportion of the population is familiar with cryptocurrency.
Most people don't know what it is or how it works.
And a vast majority simply rejects the project.
What worries them?
For people who have heard of it, what worries them is the fact that bitcoin is volatile.
You should know that El Salvador has been a "dollarized" country for several decades.
Part of the population does not see what it will change for them to have bitcoin as a possible option.
People are afraid that their pension will be paid in bitcoin in the future
The reassuring side is that for the vast majority, it will not change much as of Tuesday.
They will continue to receive dollars if they feel like it.
What may eventually change is that the government might want to pay in bitcoin, since this has been adopted as legal tender.
This is what sparked part of the protests: People are afraid that their pensions will be paid in bitcoin in the future.
It is not yet on the agenda.
► Also read: In El Salvador, the arrival of bitcoin as a national currency worries
How can the young president convince Salvadorans to adopt bitcoin?
To encourage them, he decided to give the equivalent of $ 30 in bitcoin to anyone who opened a "
wallet ”[electronic crypto-asset storage wallet].
For the moment, it is not the rush since skepticism seems to dominate.
Technically, bitcoin can reduce transaction fees dramatically
If ever there were to be users, it would be interesting to see how in practice we will facilitate this transition from dollar to bitcoin while obviously minimizing user fees. This is really the key, when using a currency: it must be simple and cost-free, or very low. This is also the argument of the Salvadoran president, when he evokes the weight of the commissions paid on the transfers of migrants.
Technically, bitcoin can reduce transaction costs considerably compared to the banking system.
This is true on paper, but in practice, when there are a lot of bitcoin transactions, there can also be bottlenecks which cause transaction costs to increase.
We will have to see how the government will deploy its support plan.
He created a fund of 150 million dollars to facilitate the use of bitcoin, to ensure that the "wallet" can be popularized and used massively.
What will be interesting will be to see the operational aspect of this reform.
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