Not a good sign. 70 percent of the population of El Salvador oppose Bitcoin law, as 7 September implementation draws near
Nearly three quarters of the population of El Salvador disagree with their government’s decision to adopt Bitcoin, the best-known cryptocurrency, as legal tender.
This is the standout finding of a poll conducted by the Central American University (UCA) in San Salvador on Thursday.
It comes after El Salvador in June this year became the first country in the world to accept Bitcoin as legal tender, after that country’s legislator approved President Nayib Bukele’s proposal to embrace the cryptocurrency.
However the World Bank, which is the international lender to developing nations, has refused to help implement it as legal tender, due to concerns over transparency and the environmental impact of Bitcoin mining.
In an effort to address environmental concerns, El Salvador’s president Nayib Bukele instructed a state-owned geothermal electric company to make plans to use clean energy from the country’s volcanoes for mining bitcoin.
He also promised measures for “immediate permanent residence” for crypto entrepreneurs who may not have to pay property or capital gains tax.
It should be remembered that Bitcoin mining uses large amounts of energy, much of it derived from the burning of fossil fuel.
But this has failed to convince outside experts, and in late June rating agency Fitch warned of greater risks for banks due to the El Salvador law that makes Bitcoin legal tender in the country.
It warned El Salvador’s move to make Bitcoin legal tender could open floodgates to money laundering, increase banks’ exposure to regulatory risks.
Low income nation
Populist President Bukele is regarded as a controversial figure, after his administration and officials faced accusations of alleged corruption and graft.
In May for example, the United States reportedly named five of Bukele’s ministers and aides as being corrupt and diverted foreign aid funds away from the country’s government institutions, instead to local civil society groups.
However President Bukele has championed Bitcoin adoption as a way to help low income countries like El Salvador move from a largely cash economy, to a digital economy, where a person’s bank account is essentially their smartphone.
It should be noted that roughly 70 percent of people in El Salvador do not have bank accounts or credit cards.
The country replaced its its local currency, the colón, with the US dollar in 2001.
Historically the country had a mostly agriculture-based economy, but it has been riven chronic political and economic instability including coups. It continues to struggle with high rates of poverty, inequality, and gang-related violent crime.
Nowadays remittances account for more than 20 percent of El Salvador’s GDP, and incumbent services can charge 10 percent or more in fees for international transfers that take days to arrive and must be collected from a physical location.
So that may explain why the country opted to adopt the cryptocurrency.
But no everyone is happy, despite the fact that El Salvador will implement Bitcoin as a legal tender on 7 September.
Reuters reported that the poll by the Central American University (UCA) showed that at least 67.9 percent of 1,281 people surveyed said they disagree or strongly disagree with the use of bitcoin as a legal tender.
Just over 32 percent of people said they agree on some level.
UCA’s poll was carried out in August, and it also showed that 9 out of 10 people did not have a clear understanding of bitcoin, and 8 out of 10 said they had little or no confidence in its use.
Most people, 7 out of 10, thought lawmakers should repeal the law that makes it legal tender.
“What we can see in this survey, in addition to this broad rejection of the implementation of bitcoin as legal tender, is that for the first time we found a significant disagreement between the population and decisions being made by the Legislative Assembly and the president,” UCA dean Andreu Oliva was quoted as saying.
The survey also showed most Salvadorans think the main beneficiaries will be the wealthy, foreign investors, the government and business leaders.
“There is a lot of concern about the possible negative effects of using bitcoin,” said Oliva.
But El Salvador is also regarded by some people as a trend setter.
Earlier this week for example a cryptocurrency ATM was set up in neighbouring Honduras, as interest in digital assets grows in the region
And in July Panama also presented draft bills aimed at making Bitcoin legal tender.