What El Salvador's bitcoin rollout could mean for mainstream adoption
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El Salvador has officially adopted bitcoin as a legal currency. CNBC’s MacKenzie Sigalos joins ‘Squawk on the Street’ to discuss the rollout and what El Salvador’s test case could mean for future bitcoin adoption. For access to live and exclusive video from CNBC subscribe to CNBC PRO:
The price of bitcoin fell Tuesday after breaking through $52,000 late Monday, reaching its highest level since May.
The price action comes on the day El Salvador is set to adopt the largest cryptocurrency by market cap as legal tender, becoming the first country to do so. Bitcoin dropped as much as 16% on Tuesday morning. It was last down about 9.5% and trading at $46,892.04, according to Coin Metrics. Ether fell 12% to $3,441.21.
Crypto adjacent stocks MicroStrategy and Coinbase also lost about 9% and 4%, respectively. Coinbase users were experiencing delayed or canceled transactions at “elevated rates” in the morning, the company said in an update on Twitter, but those issues were resolved by the afternoon. Major crypto exchanges Kraken and Gemini were also investigating delays and performance issues.
Early Tuesday El Salvador temporarily disabled Chivo, its government-run bitcoin wallet, to increase the capacity of the servers, which were hindering new users from installing it, President Nayib Bukele announced in a tweet at about 7:00 a.m. EST.
“Any data they try to enter at this time will give them an error,” he said. “This is a relatively straightforward problem, but it cannot be fixed with the system connected.”
The market action is unsurprising, according to Leah Wald, CEO at Valkyrie Investments, who said the news was largely priced into the market “a while ago.”
“When this move was first announced, it didn’t have nearly as big of an impact on price as some may have expected it might, possibly because El Salvador’s population is less than New York City’s, but also because the announcement was light on details and people were on the fence about how this was going to be implemented,” she told CNBC, noting that much of El Salvador lives in poverty and doesn’t have the internet or smartphone access required to participate in the bitcoin network. “Transaction fees, processing times, and other hurdles also make this feel more like a beta test rather than a solution to many of the problems plaguing the country’s poor,” Wald added.
As part of the new law, businesses will be required to accept bitcoin for goods and services, though merchants who aren’t technologically able to accept bitcoin will be exempt. The government has installed 200 bitcoin ATMs around El Salvador. It also bought 400 bitcoins worth about $20 million and is preloading Chivo wallets with $30 worth of bitcoin for Salvadorans who register.
Some traders are saying on social media that they will be buying $30 worth of bitcoin in their local fiat currencies to commemorate and support El Salvador’s new law, at 3:00 p.m. ET. But bitcoin prices were sliding into the afternoon anyway.
“What is most worth looking out for is whether or not neighboring countries in Latin America, or those elsewhere around the world, begin to adopt bitcoin as their national currency as well,” Wald said. “Should this occur, that is when we could see a parabolic move higher, as the momentum gained from many millions more people having instant access to crypto should result in more adoption, more HODLing, and higher prices.” HODLing is crypto community slang for the buy-and-hold investment strategy.
Bitcoin advocates have long held there’s a strong case for Latin American markets using the cryptocurrency as a medium of exchange, for remittances and even for central banks that experience high currency depreciation.
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I have been watching some videos and I was thinking about investing, but still don't know where to start from.
Well done Salvador hopefully you will kick out dollar out you contry. Well done
What a great way to have people who never trusted the government adopt a currency that will expose them to the internet and openly give out their information.
All comments here are scams based
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"Chivo" or "chido" wallet? None of this is smooth. "El Salvador" needs salvation. They made a dumb decision. They need productivity and a sound currency. Not a proxy for a Ponzi scheme scam.
Right now, Bitcoin is a textbook Ponzi scheme:
It has no intrinsic value. You can’t eat it, wear it, or heat your house with it. …
It is not a productive asset. It’s not a factory that produces an item. …
It has zero underlying value. None. …
It has minimal utility. …
Its value is solely derived from the trust that the price will continue to rise indefinitely. …
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comment below
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Stupid move
VIDEO OF PROTESTS AGAINST BITCOIN IN EL SALVADOR!!! 🔥🔥🔥🔥
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https://www.youtube.com/watch?v=Is4QA4p4nlM&ab_channel=Noobody
Haiti will be next…🔺🔺🔺
The Bitcoin catch 22…why it will never be a real currency. If Bitcoin's price were stable then maybe, just maybe it could be a legitimate currency; a currency being highly volatile doesn't work for many obvious reasons. But as we all know Bitcoin is highly volatile which is exactly the reason it makes no sense as a currency. What the volatility shows us is that Bitcoin's true appeal is for market speculators much like collectible art (I would argue collectible art has some inherent value whereas bitcoin has none). Indeed the reason everyone is talking about Bitcoin, and let's be honest here, is not because of it's usefulness as a currency but precisely because of it's market volatility. We talk about Bitcoin because of how high it's market value is. So the fact that Bitcoin exists at all is the very reason it could never be a currency. Put another way, if Bitcoin's price was stable it would not have the flash and appeal that it does and would have disappeared years ago. The reality is Bitcoin can best be described as either an investment or just an old fashioned pyramid scheme. In my humble opinion it's the latter.
Thanks for the update
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I'm sure that El Salvador will accept ETH and Tether as a legal tender too
I'm new to bitcoin and I find it difficult using these strategies well. Where can I find a legit broker? that we manage my account and also teach me how to trade.
kinda small country to inspire others with their example, also bitcoin is too fluctuative they have to follow between usdt and btc