El Salvador citizens protest against government's adoption of Bitcoin as legal tender

El Salvador has announced that it has become the first country in the world to accept Bitcoin as legal tender. The country's ruling party believes this is a "new idea" and hopes that the large-scale adoption of Bitcoin will stimulate the country's forward-looking foreign investment while reducing the cost of remittances.

According to the World Bank, remittances currently account for 24% of El Salvador's GDP. But the move has been met with skepticism and opposition at home and abroad.

The Salvadoran government has created a digital wallet app, Chivo, for its 6.4 million citizens to use, which will be pre-loaded with $30 worth of Bitcoin (about 0.0007 Bitcoin). Initially, the app was not available on the Apple App Store and Huawei App Store. At the urging of President Nayib Bukele, all app stores in El Salvador listed the app, but then had to be temporarily offline due to the influx of users.

Bukele, who at 40 is an unusually young world leader, continued to joke about the falling price of bitcoin on Twitter. Using a winking emoji, he said: “Buying the dip,” a common phrase among cryptocurrency traders when prices fall sharply. He said El Salvador bought 150 bitcoins this morning, bringing its total to 550. (At current prices, that’s the equivalent of $25.7 million.)

But the introduction of Bitcoin has not gone down well with ordinary citizens. More than 1,000 people gathered in San Salvador to protest the move, which they said would not help the country's poorest residents. "This is a currency that doesn't work for pupusa vendors, bus drivers or shop owners," one resident told Reuters.

Global financial institutions have warned El Salvador against such an approach. An IMF spokesperson said in June that "adopting Bitcoin as legal tender raises a number of macroeconomic, financial, and legal issues that require very careful analysis." Meanwhile, a World Bank spokesperson told The Washington Post in June that "while the government did approach us for assistance regarding Bitcoin, it is not something the World Bank can support given the environmental and transparency deficiencies."