Karen Hernández sells cellphone accessories in San Salvador to customers who often pay in bitcoins. She says it has brought her many benefits and doesn’t want cryptocurrency taken away from her as the IMF claims, but not everyone in El Salvador is so keen.

“It was a very, very nice experience and (using bitcoin) increased us (sales), it took us to another level of commerce,” Hernandez, 45, told AFP.

Playfully, Hernández owns a small cell phone shop in the historic center of San Salvador, where stickers and handmade signs advertise, “we accept bitcoin” through the use of the Chivo wallet.

The Chivo wallet is the government’s digital wallet created for bitcoin transactions, which has been legal tender since September 7, 2021.

Education for Bitpiece of money

Every day, thousands of Salvadorans walk through the crowded streets of the capital, where restaurants, hardware stores, pharmacies and even many informal businesses advertise that they accept cryptocurrency payments.

In an old building in the capital is Elizabeth Arévalo, 25, who works as a clerk in a computer supply store and every day she has to “teach” customers how to use the Chivo wallet so that they can buy from her business. .

“We give customers a little orientation on how to use the (Chivo) wallet (…). When they learn how to use it, they buy from us. It’s a win-win situation here. We teaches them how to use the wallet and they buy,” Arévalo told AFP.

In downtown San Salvador, there are two Chivo ATMs guarded by police, and by mid-morning few users come to make a transaction or consult one of the Chivo Wallet advisors who stay on site.

But many are not satisfied, like Antonio Molina, who assures us that he does not accept payments in bitcoins in his itinerant sale of bananas.

“I don’t care if they remove bitcoin or not, for me it’s not a plus, I only work with dollars, I don’t accept bitcoin,” Molina said.

In El Salvador, bitcoin circulates at par with the US dollar, the official currency for two decades.

big risks

The International Monetary Fund (IMF) on Tuesday urged El Salvador to withdraw bitcoin as legal tender, noting “great risks associated” with using the cryptocurrency, a blow to President Nayib Bukele, its enthusiastic promoter.

The IMF’s board urged the Salvadoran government to officially stop using bitcoin, citing dangers to “financial stability, financial integrity, and consumer protection, as well as potential tax contingencies.”

For traders like Arevalo, the idea of ​​bitcoin ceasing to be legal tender doesn’t sit well.

“Sales have increased since we accepted bitcoin, and at least here in the industry, we are not in favor of the use of bitcoin being phased out, we are already used to using it and that’s a payment option,” Arevalo said.

Running back and forth in his business selling tech products and perfumes in the center of the capital, Juan Carlos Pérez, 40, says he personally uses bitcoin and is “satisfied” with the crypto -cash.

“There are risks, I know there may be (…) a vulnerability in the exchange, (there is) no financial market that controls (bitcoin). But it is practical”, has commented Perez, while checking the Chivo wallet app on his phone.

Fragility

The Salvadoran government is discussing with the IMF an agreement of 1.3 billion dollars, to clean up its coffers.

“The logic would be that the government of El Salvador understands the fragility of its situation and that everything ultimately depends on this agreement with the IMF,” warned economist Luis Memberño.

This year, according to Memberño, the government hopes to obtain 400 million dollars from the World Bank, 400 million from the Inter-American Development Bank (IDB) and 200 million from the Central American Bank for Economic Integration (BCIE).

All of these loans “are subject” to the $1.3 billion agreement the government is seeking with the IMF, Memberño warns.

On Tuesday, the IMF’s board of directors acknowledged that digital means of payment can contribute to banking in El Salvador, but called on the government to control them.

Bukele reacts with a meme

That same night, Bukele reacted with a Simpsons meme to the IMF recommendation which ironically reads, “I see you IMF. It’s very nice.”

During his tenure, 1,630 bitcoins were acquired with public funds. Memberño warned that Bukele “is not going to give up on a personal project of this magnitude”.

Its finance minister, Alejandro Zelaya, merely underlined on Twitter the part of the IMF press release stressing the importance of strengthening financial inclusion.

“It seems to work to give financial inclusion, but you shouldn’t have to. The future waits for no one, #Bitcoin,” Zelaya wrote.

Last year, Bukele also announced the issuance of “bitcoin bonds” for $1 billion. As of Thursday, bitcoin was trading at around US$37,000, down from a November high of US$67,734.

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