2021-08-30 Guardian - Scepticism grows in El Salvador over pioneering BTC gamble

[acquafredda]

Litha María de Los Angeles slaps two cheese-filled pupusas – the El Salvadoran cornmeal flatbread – on the griddle. With a camera click on the QR code, she receives her payment: four hundred-thousandths of a Bitcoin. Then, as the rain pelts the corrugated iron roof and a gust of wind lifts the blue plastic table cloths, the power cuts out.

A tumultuous few weeks awaits El Salvador as it prepares to become the first country to adopt Bitcoin, the world’s most popular decentralised digital currency, as legal tender on 7 September. With that deadline looming, a host of challenges – technological, financial and criminal – threaten to sink the plan of the president, Nayib Bukele, to ride the Central American economy out of its current choppy waters on the back of a cryptocurrency wave.

https://www.theguardian.com/world/2021/aug/30/scepticism-grows-in-el-salvador-over-pioneering-bitcoin-gamble

Only a few days apart, two completely different articles around the matter: the one I linked above which is obviously a critical one and the following I am going to add which tells another story.
Where do you think the truth stand or rather a more objective approach on what is really going on in El Salvador?

https://bitcoinmagazine.com/culture/bitcoin-take-el-salvador-into-the-future

[NeuroticFish]

Where do you think the truth stand or rather a more objective approach on what is really going on in El Salvador?

The truth is always somewhere in the middle.
Bitcoin is the future. But for that you need working internet, you need working power, you need to know a bit of technology.
People are usually wary about the new, especially if they don't understand it.

For example in the first quote, so what that the power goes out? She can probably check her balance from the phone; she most probably has the app on the phone from the start actually. Of course, if the WiFi router is out, she has to turn the mobile data on.

Of course that older people, people who have problems even sending a picture over WhatsApp, will be lost in all this and for them this is some jibber-jabber to make them lose money (you know, that colored paper).

[DooMAD]

Litha María de Los Angeles slaps two cheese-filled pupusas – the El Salvadoran cornmeal flatbread – on the griddle. With a camera click on the QR code, she receives her payment: four hundred-thousandths of a Bitcoin. Then, as the rain pelts the corrugated iron roof and a gust of wind lifts the blue plastic table cloths, the power cuts out.

And this is a worse scenario to a credit/debit card payment how?  How often do the media dare to attempt to make an argument that we shouldn't use Visa, Mastercard, etc because they don't work when there's no electricity?  

[o_e_l_e_o]

And this is a worse scenario to a credit/debit card payment how?

At least with bitcoin you could instantly whip out your phone and look up a block explorer to see if the transaction went through, or even to create a second QR code payment request if it didn't. Good luck doing any of that with a credit card. Did the transaction go through? You'll find out in 3-5 days. You want to phone Visa to ask if a transaction for $5-10 went through? Haha, good luck with that. You want to accept a new transaction only using your phone? Not possible.

Some of the other quotes from the article are equally dumb. For example:

[Bitcoin] prides itself on the anonymity of transactions

...said no one who knows anything about bitcoin, ever.

[SFR10]

Same day, two completely different articles around the matter:

Small correction: The second article was published on the 22nd of August

Where do you think the truth stand or rather a more objective approach on what is really going on in El Salvador?

It's a little bit of both ^{[like what @NeuroticFish posted]} and it's perfectly normal. On one side, it's the computer illiterate people that think they're being brainwashed while on the other side, it's the younger ^{[for the most part]} generation that has at least a basic idea of what it is and what it could achieve... The latter one may be the minority at this moment ^{[based on the surveys]}, but that doesn't mean they can't influence others ^{[it'll take time]}.
^{- Personally, I'm expecting to see a similar outcome to how people changed their opinion about Japanese cars over the years [it didn't have a good reputation, but look where it stands now].}

[Sithara007]

I don't expect anything better from left-wing mouthpieces such as The Guardian. I agree with NeuroticFish, when he says that the truth is somewhere in the middle. There will be some issues, and they are likely to persist for 6 to 12 months. How the government handles this transition period will determine the fate of Bitcoin in El Salvador. My main worry is that Bitcoin was perhaps rolled out in a hurry, much before the ordinary citizens could make the preparations. The supporting mechanism was not in place, when the announcement regarding legal tender was made. The government on the other hand made an illogical request to the World Bank (which was promptly rejected) to help them with the Bitcoin adoption.

[o_e_l_e_o]

My main worry is that Bitcoin was perhaps rolled out in a hurry, much before the ordinary citizens could make the preparations. The supporting mechanism was not in place, when the announcement regarding legal tender was made.

I have sympathy with this point of view and for the people involved, but the counterpoint would be "When will ever be a good time?". There will always be people complaining it was too soon, there will always be business that don't want to change and adapt, and there will always be the central banks telling everyone that it's a terrible idea. The president has put a number of things in place to ease the transition - every Salvadoran gets $30 of free Bitcoin in their wallet, a $150 million fund to provide liquidity for BTC/USD swaps, 200 new bitcoin ATMs across the country. I have respect for the "Let's just get things done" attitude which seems to missing in our government in the US, which will drag things on for months and months with no resolution.

The government of El Salvador have also just released a commercial explaining some of the changes: https://www.reddit.com/r/Bitcoin/comments/pes59v/firstever_bitcoin_commercial_made_by_a_national/. You can find an English translation in the reddit comments. Notably:

Using Bitcoin is not compulsory.
...
Using Bitcoin is easy, and it's optional.

So although it's legal tender, doesn't seem it is mandatory for people or business to actually accept it.

[o_e_l_e_o]

It's disaster waiting if it's mandatory to accept BTC and government actually punish those who don't accept BTC.

Punishment, yes, but I don't think it would be a disaster to make it mandatory for all merchants accept bitcoin.

The Salvadoran government have released an app called Chivo. Misgivings about using a government designed and sponsored wallet aside, from what I've read the app allows individuals and merchants to send or receive payments in both USD and BTC, and convert between the two. There is nothing stopping a bitcoin-sceptical merchant from using the app to accept bitcoin and then immediate convert it to USD, much the same as what happens already with many merchants and payment processors around the world. There are no additional taxes or commissions to pay for conversion, so it would literally be as ease as just downloading the app and displaying a QR code. If you don't want to keep the bitcoin that customers pay you, then you can convert immediately to USD and never have to worry about setting up your own wallet, cold storage, backing up seed phrases, etc.

Having said all that, given that every Salvadoran can now convert immediately between the two currencies with no taxes or commission, a bitcoin user can effectively spend their bitcoin anywhere in the country - it's just that the conversion to USD takes place on their wallet instead of 5 seconds later on the merchant's wallet.

[Betwrong]

~
Of course that older people, people who have problems even sending a picture over WhatsApp, will be lost in all this and for them this is some jibber-jabber to make them lose money (you know, that colored paper).

It's been already discussed on this forum that this COVID-19 pandemic has caused the adoption of new technologies by elderly people, and maybe the Salvadoran government took that fact into account when planning to make cryptocurrency legal tender.

I personally believe that despite the fact that it's harder to learn new things when you are older, Bitcoin can be adopted by old people in general. If there's a will, it's not that hard to learn how to send a picture over WhatsApp or pay for your breakfast with BTC.

[o_e_l_e_o]

Even so, some statistic (such as https://datareportal.com/reports/digital-2021-el-salvador) shows only about 50.5% citizen have internet connection, so i still have some concern.

I wasn't aware that number was so low. That is a real road block to adoption, although as discussed above, applies equally to any form of payment other than physical cash. Given that the same link says 66% of Salvadorans use social media, then you can only assume that many people still have internet access from public hotspots, schools, libraries, etc., even if they don't have their own connection, although that's not going to help them pay a merchant on the go.

I suppose if the number of people truly is that low, then perhaps businesses are incentivized to run a public WiFi point that customers can connect to in order to make payments, be they BTC or otherwise.

[acquafredda]

Thanks SFR10, corrected. I remember it showed up in my feed in the same day and I got mistaken.
Back on the topic, most of you guys are right in one way or another but I think we will have to wait at least until EOY to see what really happened in El Salvador about this breakthrough step towards bitcoin adoption.
I do not necessarily think we will see much of an increase in bitcoin use among the Salvadorans.

[suzanne5223]

First, it is sad that some people will always make a big deal out of cryptocurrency, and according to what I read about the crypto law provided by the El Salvador government, people are not forced to make use of BTC as payment so there shouldn't be any problem. However, some Media sites are the major problem we have in terms of misinformation cause what I once read when El Salvado want to integrate crypto as payment is that people are not allowed to use any wallet except the wallet created by the government.
In the meantime, it is too early to say Bitcoin users among the Salvadorans won't increase cause the crypto market is full of possibilities.

[malevolent]

The World Bank says Salvadorean companies experience on average 1.2 power outages per month. Sounds like it's enough to be an annoyance but would it really be a deal breaker towards BTC acceptance? I assume these would last minutes to hours at most and cash can always be used even when there's no power.

[Lucius]

Having said all that, given that every Salvadoran can now convert immediately between the two currencies with no taxes or commission, a bitcoin user can effectively spend their bitcoin anywhere in the country - it's just that the conversion to USD takes place on their wallet instead of 5 seconds later on the merchant's wallet.

I believe that the skepticism, in this case, stems from the fact that people are not sufficiently informed, and that they completely misunderstand that Bitcoin is being imposed on them as a kind of obligation that they cannot circumvent. If by any chance the El Salvador government had decided to kick out US $ and introduced only BTC as a legal tender, then I would have understood the concerns of ordinary people - but the way things are set up, everyone has a choice and can choose their currency.

This is not the first (or last time) that people are skeptical or afraid of new technologies, because we all know how difficult it is to get rid of old habits, despite the fact that new technologies bring us progress.

[SFR10]

every Salvadoran gets $30 of free Bitcoin in their wallet,

But only if they'll be using the Chivo app ^{[unfortunately]}.

So although it's legal tender, doesn't seem it is mandatory for people or business to actually accept it.

I'm pretty sure when it first started making noises, I read a bunch of articles that mentioned if someone were to pay for something with BTCitcoin, they should accept it ^{[looks like it was just misleading information that aimed at creating panic among the elderly population]}.

Having said all that, given that every Salvadoran can now convert immediately between the two currencies with no taxes or commission, a bitcoin user can effectively spend their bitcoin anywhere in the country - it's just that the conversion to USD takes place on their wallet instead of 5 seconds later on the merchant's wallet.

That, together with the above things should be sufficient enough for easing most of their concerns.

then you can only assume that many people still have internet access from public hotspots,
~Snipped~
then perhaps businesses are incentivized to run a public WiFi point that customers can connect to in order to make payments, be they BTC or otherwise.

And unfortunately, that'll potentially open the door to other dangers ^{[e.g. hacks]}.

Thanks SFR10, corrected. I remember it showed up in my feed in the same day and I got mistaken.

You're very welcome

I do not necessarily think we will see much of an increase in bitcoin use among the Salvadorans.

Same here... Might take a year or two before we'll see a significant change.

[o_e_l_e_o]

The World Bank says Salvadorean companies experience on average 1.2 power outages per month. Sounds like it's enough to be an annoyance but would it really be a deal breaker towards BTC acceptance?

Presumably these are local power outages as well? Shouldn't really make a difference to people using apps on phones with mobile data? The merchant can always use their phone to create a back up QR code if their wall-powered terminal is offline.

But only if they'll be using the Chivo app ^{[unfortunately]}.

Sure, but equally nothing stopping them from downloading the Chivo app, claiming the $30 free bitcoin, and then immediately withdrawing it to their own wallet, ideally via a mixer.

I'm pretty sure when it first started making noises, I read a bunch of articles that mentioned if someone were to pay for something with BTCitcoin, they should accept it

Yeah, that's initially what I thought as well, although now it seems like it will be entirely optional.

[cr1776]

The World Bank says Salvadorean companies experience on average 1.2 power outages per month. Sounds like it's enough to be an annoyance but would it really be a deal breaker towards BTC acceptance? I assume these would last minutes to hours at most and cash can always be used even when there's no power.

I wouldn't think it would matter - it would impact using a scanner to scan a bar code, a cash register, or a credit card etc.  So as you say, someone would just use cash, but I don't see why it would matter MORE for bitcoin than for the rest.

As Sithara007, what do you expect from a left wing paper that doesn't want people to have ownership of their lives?  They want power and that means controlling people's money so that they can inflate away its value and preventing people from having privacy - hence the desire to have no one have any privacy for their money or anything else.

End to end, on device encryption will be key and obfuscation of transactions on the block chain critical over time.

[bbc.reporter]

@acquafredda. Jack Mallers’ original plan of using stablecoins to redollarize El Salvador would have been the better roadmap, I reckon. Their bitcoin adoption process is being moved too quickly by the El Salvadorian government. Also much of the El Salvadorian citizens have yet to experience bitcoin’s volatility. Wait until they experience this hehe.

[stompix]

And this is a worse scenario to a credit/debit card payment how?  How often do the media dare to attempt to make an argument that we shouldn't use Visa, Mastercard, etc because they don't work when there's no electricity?  

Whatabout.....
How many countries in the world are forcing businesses to accept any credit card for any purchase?
Can you name a few? 

Punishment, yes, but I don't think it would be a disaster to make it mandatory for all merchants accept bitcoin.

The Salvadoran government have released an app called Chivo. Misgivings about using a government designed and sponsored wallet aside, from what I've read the app allows individuals and merchants to send or receive payments in both USD and BTC, and convert between the two. There is nothing stopping a bitcoin-sceptical merchant from using the app to accept bitcoin and then immediate convert it to USD, much the same as what happens already with many merchants and payment processors around the world.

I wonder what your opinion would be on the same subject but with a government forcing all merchants to take credit and debit cards no matter the sums involved as I hope it's not a case of it's ok to force this because and this is good and that is bad. I find it interesting that when we're talking about bitcoin we're talking about liberty and freedom yet people advocating this have no second thoughts of imposing something on others and deciding what they should do and how they should be doing...that if they aren't stupid imbeciles who can;t understand it and don't deserve any better /s

Not even mentioning the fact that already some other users are labeling protestors as paid agitators, yeah, how I missed the time when I was one of those in the '80s. Guess what I was protesting then, some guy deciding by himself the future of a country! Oh, sweet irony!

[o_e_l_e_o]

I wonder what your opinion would be on the same subject but with a government forcing all merchants to take credit and debit cards no matter the sums involved as I hope it's not a case of it's ok to force this because and this is good and that is bad.

Enforcing a specific payment method for fiat isn't the same as enforcing an actual currency though, and governments force merchants to accept *insert fiat of choice* all the time. There needs to be consensus across the country about what constitutes an acceptable payment, as if everyone tries using different currencies or even just plain bartering different goods and services, then widespread trade and commerce becomes very difficult, if not impossible.

I find it interesting that when we're talking about bitcoin we're talking about liberty and freedom yet people advocating this have no second thoughts of imposing something on others and deciding what they should do and how they should be doing

Merchants would be free to immediately convert their bitcoin to fiat, if that's what they choose to do. But if an individual wants to pay in bitcoin, then equally I think that they should be free to do so.