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Bitcoin in El Salvador: System crashes, value plummets

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El Salvador’s adoption of bitcoin as legal tender, alongside the dollar, was marked by a computer system crash on Tuesday. As well, the cryptocurrency suffered a sharp drop in value, before bouncing back.

bitcoin in el salvador

Some platforms, including Apple and Huawei, did not support the government-backed digital wallet, known as Chivo, and the servers had to be taken offline after they could not keep up with the pace of user registrations.

“@chivowallet is not working. We disconnected it to increase server capacity,” wrote on Twitter early Tuesday the popular Salvadoran president Nayib Bukele, who initiated the currency reform despite a strong backlash from the population. The Salvadoran government recently purchased 400 coins with a market value of $21 million.

It also launched the “Chivo” (“Super”, in colloquial language) electronic wallet needed to carry out everyday transactions in bitcoins with one’s cell phone and gave $30 as a welcome gift to those who downloaded it.

Bitcoin will save El Salvador’s head of state and his government $ 400 million in bank fees when sending money by remittance, especially to the United States (and other countries), which represents 22% of the country’s GDP.

“We don’t want it”
Nonetheless, recent polls indicate that over two-thirds (66%) of El Salvador’s 6.5 million people want to keep using the U.S. dollar exclusively as legal tender, a practice that has been in place for the past 20 years.

Besides economists, the World Bank, the International Monetary Fund (IMF) and the Inter-American Development Bank (IDB) have also expressed skepticism.

Bitcoin lost $5,000 in a few minutes on the first day of its legalization in El Salvador, its biggest loss since its plunge in May. At around 6:15 p.m. (local time), the crypto-currency was down 9% to $47,225, erasing much of its gains of recent weeks, before rebounding slightly.

For MetaNews.

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Jonathan Hobbs

Jonathan Hobbs is an Australian investor and author that trades on a variety of asset classes, including currencies, equities, and commodities. Jonathan’s experience as a macro trader leverages his unique writing style to combine important elements, such as technical analysis and news. The other elements that he brings into his unique writing styles are foundation analysis aimed at rational equilibrium values, evaluating the sizes and motivations of buyers and sellers, as well as identifying the needs of the buyers and sellers in the individual markets. Jonathan is committed to quality writing for new traders as well as veterans.

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