Bitcoin crash makes no difference to those who embraced cryptocurrency in El Salvador – Cryptocurrencies

Nahuizalco is a small municipality of about 50,000 people in southwest El Salvador, about 70 kilometers from the Guatemalan border – and even in this remote location, Salvadorans have continued to use Bitcoin (BTC) for payments since Congress passed it. and the president signed, on September 7, 2021, the controversial legislation that became known as the “Bitcoin Law”.

In practice, the law forced establishments to accept BTC, in addition to the dollar, which until then was the only currency in the country, to receive payments within the territory. One of the beneficiaries was Miguel Martínez, a 41-year-old trader who has had a business selling LPG gas in Nahuizalco for more than two years and has been accepting cryptocurrency from customers since last year.

“In the beginning it was quite complicated because people didn’t assimilate it, they thought it would be a single currency, many complications. The system was implemented overnight, people knew nothing. But, over time, a lot of people started to accept it because the arrival of Bitcoin favored them in some way”, Miguel told the InfoMoney CoinDeskin conversation through a video call on the cell phone, connected to a LAN house which is one of the few places in Nahuizalco with a Wi-Fi connection (part of the chat can be seen in the player above).

Despite the precariousness of technology in the locality, Miguel has everything he needs to accept Bitcoin from his customers, most of whom are other small merchants in the region, such as bakeries and snack bars that sell tortillas and pupusas, a typical Salvadoran dish consisting of tortilla dough. with salty filling.

If before he was forced to charge customers in person, with Bitcoin everything has changed. Less than a year ago, he began to receive payment from a distance before leaving, on a motorcycle, to make the day’s deliveries. When he needs to collect in person, he uses a Bitcoin payment machine developed by Paxful, a crypto company with a strong presence in El Salvador.

But most Salvadorans use the Chivo wallet, which the government launched last year to promote the use of digital currency. Everyone who downloaded Chivo earned $30 in Bitcoin to spend however they wanted, and merchants like Miguel took the opportunity to get customers willing to test the novelty.

In the end, those who embraced the technology continued using the cryptocurrency even with the end of the government bonus. “More or less half pays in dollars, and the other half in Bitcoin,” reveals the merchant.

Financial inclusion is a deep problem in the small Central American country. According to data from the World Bank, only 30% of the population had a bank account in 2017. As of 2021, with the transformation of Bitcoin into legal tender, this reality began to change for part of the population, even with the difficulty of access. The technology.

The country’s experience was challenged right off the bat by entities like the International Monetary Fund (IMF), and it has only gotten worse with Bitcoin’s poor result over the past seven months. From $69,000 in November last year, the cryptocurrency plummeted to less than $18,000 a few days ago, a devaluation of nearly 75%.

But, contrary to what one might think, the brutal drop in the price of the digital currency does not seem to have made a difference to the average Bitcoin user in El Salvador. The prices of products sold in the country are denominated in dollars, and those who receive in Bitcoin usually convert the asset on the spot to the US currency as a means of escaping volatility.

Unlike Brazil, where cryptocurrencies do not have space as a payment solution due to the huge penetration of Pix, in countries like El Salvador BTC operates as a payment network open to everyone, which works 24 hours a day.

The El Salvador experiment is inspired by the main purpose described by the inventor of Bitcoin in the paper that introduced the idea of ​​digital currency, published in 2008. In it, the inventor describes the technology as a digital money that would work without intermediaries and without the need to establish trust. between the parts. Therefore, it could dispense with private banks or central banks.

In El Salvador, Bitcoin is not an investment, it’s Pix.

“If these people go to a bank to ask for a card machine, the bank will not give it to them. So they use Bitcoin as an independent banking network,” explains Will Hernández, Paxful’s business director for Latin America. “Entrepreneurs and merchants who already know the technology, who have been educated, who already understand what Bitcoin is, keep all the Bitcoin they receive. But most convert immediately to dollars.”

Contrary to what happened with the government’s Bitcoin reserves, which have dropped by more than 50% in recent months, the Salvadoran people seem to have gotten through the cryptocurrency crisis unscathed. At least, that’s how it is in small Nahuizalco, where Miguel Martínez lives and works.

“We who use the Bitcoin system have already adapted to the changes that have taken place. It is true that what can go up can also go down, but we adapted. For me personally, it doesn’t affect whether it goes up or down, we do it our way, and we get along well”.

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